Socially Conscious Medalist Funds
These are the cream of the crop among funds that invest sustainably.
Investor interest in sustainable investing is on the rise. The 2014 US-SIF Report on U.S. Sustainable, Responsible and Impact Investing Trends reported $6.57 trillion invested in this manner, a 77% increase over 2012. This growth has come with an evolution in approach and terminology. What used to be called socially responsible investing--avoiding such investments as alcohol, tobacco, and gambling stocks for ethical reasons--is now increasingly known as sustainable investing, with much more emphasis on environmental, social, and governance, or ESG, factors that could have material impacts on a company’s long-term success. Sustainable or ESG funds typically look for investments that score well in areas like environmental sustainability, employee relations, and corporate governance. Many also engage directly with companies to improve their performance in these areas.
Though sustainable investing is dominated by institutional investors, the number of sustainable mutual funds in the U.S. has grown to more than 100. Last year we surveyed the field, discussing the various types of ESG funds, but even with such a survey it can be tough to sort through the bewildering array of options. That’s where the Morningstar Analyst Rating comes in handy. Out of more than 100 funds that Morningstar classifies as socially responsible, our analysts cover eight, and the four below earn medals, two of them Silver and two Bronze.
David Kathman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.