We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
ESG Investing Continues to Attract Record Flows: 4 Fund Picks
Read MoreHide Full Article
The pandemic has undoubtedly pushed investors toward sustainable investing, making them focus more on environmental, social and governance (ESG) aspects rather than sticking to short-term profit goals. Sustainable investing or ESG-themed investment is considered a smart long-term investment by many, thanks to their value-based approach, which is attractive to millennials at large.
Last year, sustainable funds witnessed a net flow of $51 billion, which is more than double the total for 2019 ($21.4 billion) and a ten-fold growth from 2018’s $5.4 billion. The acceleration from 2020 has put ESG funds on track for another year of record inflows. Per a Morningstar report, U.S. sustainable funds in the first quarter of 2021 witnessed $21.5 billion in net inflows, which is higher than the previous record and all-time high of $20.5 billion achieved in the fourth quarter of 2020. And in the reported quarter, there were 11 funds launched in the United States with sustainability mandates, an attractive investment option for investors planning to shift to sustainable investment option with low-carbon footprints assets.
Given the current scenario, ESG investments could become a $1-trillion category by 2030, according to Armando Senra, BlackRock’s head of iShares Americas. Factors like the pandemic’s disproportionate impact on minorities, societal unrest and climatic anomalies will continue to make investors shift focus to ESG investing. Adding to the momentum of ESG investing will be a growing class of investors, especially millennials and women, who have established their roles as more-conscious consumers. This population also adopts a similar approach while making investment decisions.
Millennials Encourage Sustainable Investment
Millennials hold the reputation of being socially aware and have a value-driven approach when it comes to investment and career. From a random search on Google to pressurizing companies to disclose measurement and transparency of ESG parameters, this group is doing its best to use its capital to drive change, and not be misled by greenwashing or greenwishing.
Additionally, this demographic group that represents 79.4 million people in the United States is about to inherit a significant amount of wealth, around a $30-trillion intergenerational wealth transfer from baby boomers. This generation shall continue to influence others (Gen Z, Gen X and baby boomers) to take ESG factors into consideration, given their performance and capability to manage social, environmental and political issues.
Per a MSCI report, investors contributed $51.1 billion to sustainable funds in 2020 compared to less than $5 billion five years ago. About 88% of these high-net-worth millennials are actively reviewing the ESG impact of their investment holdings.
4 ESG Funds to Add to Your Portfolio
We have, therefore, shortlisted four ESG-focused mutual funds. All these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). In addition, the minimum initial investment for these funds is within $5,000.
We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
The question here is why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
New Alternatives Fund Class A (NALFX - Free Report) seeks long-term capital growth with income as its secondary objective. It primarily invests in common stocks of companies and even in other equity securities such as real estate investment trusts and American Depository Receipts.
This Zacks sector – Other product has a history of positive total returns for more than 10 years. Specifically, NALFX has a three and five-year returns of nearly 29% and 20.8%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
NALFX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.96% compared to the category average of 1.26%.
Janus Henderson Global Technology and Innovation Fund Class A (JATAX - Free Report) aims for long-term growth of capital. The fund invests majority of net assets in securities of companies benefiting from advances or improvements in technology.
This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 30.8% and 31.9% over the past three and five-year period, respectively. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
JATAX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.99% versus the category average of 1.05%.
Parnassus Mid Cap Growth Fund - Investor (PARNX - Free Report) aims for capital appreciation. The fund invests majority of assets in mid-sized growth companies.
This Zacks Sector – Large Cap Value has a history of positive total returns for more than 10 years. Specifically, PARNX has returned 18.4% and 16.7% for the three and five-year periods, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PARNX carries a Zacks Mutual Fund Rank #2 and has an annual expense ratio of 0.83%, which is below the category average of 1.11%.
Calvert Equity Fund Class A (CSIEX - Free Report) aims for growth of capital through investment in stocks believed to offer opportunities for potential capital appreciation. The fund invests majority of assets in common stocks of companies that rank among the top 1,000 U.S.-listed companies.
This Zacks Large Cap Growth product has a history of positive total returns for more than 10 years. Specifically, CSIEX has a three and five-year returns of 23.8% and 20.3%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
CSIEX carries a Zacks Mutual Fund Rank #2 and has an annual expense ratio of 0.94% compared to the category average of 1.00%.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week.
Image: Bigstock
ESG Investing Continues to Attract Record Flows: 4 Fund Picks
The pandemic has undoubtedly pushed investors toward sustainable investing, making them focus more on environmental, social and governance (ESG) aspects rather than sticking to short-term profit goals. Sustainable investing or ESG-themed investment is considered a smart long-term investment by many, thanks to their value-based approach, which is attractive to millennials at large.
Last year, sustainable funds witnessed a net flow of $51 billion, which is more than double the total for 2019 ($21.4 billion) and a ten-fold growth from 2018’s $5.4 billion. The acceleration from 2020 has put ESG funds on track for another year of record inflows. Per a Morningstar report, U.S. sustainable funds in the first quarter of 2021 witnessed $21.5 billion in net inflows, which is higher than the previous record and all-time high of $20.5 billion achieved in the fourth quarter of 2020. And in the reported quarter, there were 11 funds launched in the United States with sustainability mandates, an attractive investment option for investors planning to shift to sustainable investment option with low-carbon footprints assets.
Given the current scenario, ESG investments could become a $1-trillion category by 2030, according to Armando Senra, BlackRock’s head of iShares Americas. Factors like the pandemic’s disproportionate impact on minorities, societal unrest and climatic anomalies will continue to make investors shift focus to ESG investing. Adding to the momentum of ESG investing will be a growing class of investors, especially millennials and women, who have established their roles as more-conscious consumers. This population also adopts a similar approach while making investment decisions.
Millennials Encourage Sustainable Investment
Millennials hold the reputation of being socially aware and have a value-driven approach when it comes to investment and career. From a random search on Google to pressurizing companies to disclose measurement and transparency of ESG parameters, this group is doing its best to use its capital to drive change, and not be misled by greenwashing or greenwishing.
Additionally, this demographic group that represents 79.4 million people in the United States is about to inherit a significant amount of wealth, around a $30-trillion intergenerational wealth transfer from baby boomers. This generation shall continue to influence others (Gen Z, Gen X and baby boomers) to take ESG factors into consideration, given their performance and capability to manage social, environmental and political issues.
Per a MSCI report, investors contributed $51.1 billion to sustainable funds in 2020 compared to less than $5 billion five years ago. About 88% of these high-net-worth millennials are actively reviewing the ESG impact of their investment holdings.
4 ESG Funds to Add to Your Portfolio
We have, therefore, shortlisted four ESG-focused mutual funds. All these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). In addition, the minimum initial investment for these funds is within $5,000.
We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
The question here is why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
New Alternatives Fund Class A (NALFX - Free Report) seeks long-term capital growth with income as its secondary objective. It primarily invests in common stocks of companies and even in other equity securities such as real estate investment trusts and American Depository Receipts.
This Zacks sector – Other product has a history of positive total returns for more than 10 years. Specifically, NALFX has a three and five-year returns of nearly 29% and 20.8%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
NALFX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.96% compared to the category average of 1.26%.
Janus Henderson Global Technology and Innovation Fund Class A (JATAX - Free Report) aims for long-term growth of capital. The fund invests majority of net assets in securities of companies benefiting from advances or improvements in technology.
This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 30.8% and 31.9% over the past three and five-year period, respectively. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
JATAX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.99% versus the category average of 1.05%.
Parnassus Mid Cap Growth Fund - Investor (PARNX - Free Report) aims for capital appreciation. The fund invests majority of assets in mid-sized growth companies.
This Zacks Sector – Large Cap Value has a history of positive total returns for more than 10 years. Specifically, PARNX has returned 18.4% and 16.7% for the three and five-year periods, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PARNX carries a Zacks Mutual Fund Rank #2 and has an annual expense ratio of 0.83%, which is below the category average of 1.11%.
Calvert Equity Fund Class A (CSIEX - Free Report) aims for growth of capital through investment in stocks believed to offer opportunities for potential capital appreciation. The fund invests majority of assets in common stocks of companies that rank among the top 1,000 U.S.-listed companies.
This Zacks Large Cap Growth product has a history of positive total returns for more than 10 years. Specifically, CSIEX has a three and five-year returns of 23.8% and 20.3%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
CSIEX carries a Zacks Mutual Fund Rank #2 and has an annual expense ratio of 0.94% compared to the category average of 1.00%.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week.
Get it free >>