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First Cut Mutual Funds Socially Responsible Investing

ESG Equity Mutual Funds

Environmental, social and governance (ESG) investing attempts to match investors’ investments with their beliefs. This month’s Mutual Fund First Cut seeks out mutual funds classified as following a socially responsible approach to investing.

by Charles Rotblut | June 2020

Charles Rotblut leads a class in AAII's new Essential Investing Video Course. Go to https://www.aaii.com/ves for more information and to subscribe.


Environmental, social and governance (ESG) investing attempts to match investors’ investments with their beliefs. Portfolio managers following such strategies seek out securities with both favorable ESG ratings and other attractive investment characteristics. Similar to the ETF First Cut presented here, this month’s Mutual Fund First Cut seeks out mutual funds classified as following a socially responsible approach to investing. Specifically, it seeks socially responsible stock funds with below-average expense ratios and no loads. Passing mutual funds are also both open and available to individual investors. A total of 28 mutual funds passed the screen as of May 2020. Most are actively managed. The screen is available to A+ Investor subscribers.

In terms of relative performance, several of these funds realized higher returns than many of their peers over the last one- and three-year periods. This suggests that it has been possible to do good while doing well. Careful selection is still required, as evidenced by poor one- and three-year returns for certain funds. There is also a greater mix of funds than many investors might anticipate. More than half of the funds invest overseas. There were also some small- and mid-cap funds making the First Cut.

The 24 ESG mutual funds with at least one full year of returns as of April 30, 2020, are presented in the table below. They are sorted from highest to lowest based on total one-year performance.

Discussion

GORDON R from NC posted over 6 years ago:

I have owned T Rowe Price New Asia fund (PRASX) for over 15 years,long before ESG was a concept. What makes you think that New Asia is an ESG fund? In fact you have 9 T Rowe Price funds listed, what makes you think that any of them are ESG funds? Gordon Robinson North Carolina


JOHN L from TX posted over 6 years ago:

Charles Rotblut, why doesn't this article state for the very outset that it is not available to all AAII Journal subscribers but only to those who subscribe to your new A+ program? To fail to do this makes the article a waste of time for many and only an attempt to only gain A+ subscribers.


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