Including ESG considerations into an investment approach often leads to portfolios that have a growth bias. But with investors shunning the growth style and favouring more value-oriented investments in 2022, sustainable investors had to stomach a substantial loss.
As an indication of this, the MSCI World Index lost 7.83% (in GBP), the MSCI World Growth Index bled 20.29%, while the MSCI World Value Index rose 5.26%.
Against this backdrop and with a turbulent market environment in mind, it is no surprise that investors’ interest dropped. Inflows into sustainable funds across all asset classes fell by roughly 70% in comparison with 2021’s flows.
See also: Green Dream with Rathbones’ multi-asset team: What clients need to understand about ESG performance
Despite the considerable decrease in new money flowing into sustainable funds, they still proved to be more resilient than the broader market.
Moving into 2023, the market took a turn once again as growth funds rebounded in the first four months of the year. The MSCI World Growth Index returned 11.92% versus 4.91% for the MSCI World Index and a negative 1.57% for the MSCI World Value Index.
Click below for a look at three sustainable growth strategies demonstrating a solid approach.
Read the full analysis in ESG Clarity’s June 2023 digital magazine
