Analysis: Three Things To Know About ESG Fund Behaviour During the Pandemic
One bright spot in the unprecedented stock market volatility brought on by the Covid-19 pandemic is that most US environmental, social and governance (ESG) index funds are outperforming traditional index funds.
Index funds are designed to track specific indexes, like the Dow Jones or S&P 500. They are among the most popular investments by investors, including retirement savers. ESG index funds incorporate data points relating to a company’s ESG profile as well as traditional financial metrics to screen and weight securities.
Most ESG funds now in existence were launched in 2013-2014, when the approach gained momentum. The Covid-19 market crash, the worst single-day drop since 1987, is the first major test of these funds’ resilience.
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