Performance of FWM ESG Portfolios

A difficult year for everyone!

In 2021, over $500 billion flowed into ESG (Environmental, Social, and Governance) funds, and at the beginning of 2022 it was expected that similar growth would continue. However, 2022 has proved to be a difficult year for investment markets in general, let alone when you involve the difficult addition of ESG.

Investment Metrics, a global provider of portfolio analytics, found that 78% of global ESG equity products have underperformed their benchmark throughout 2022. Of course, this had not always been the case, prior to 2022, 80% of the same cohort of ESG funds beat the MSCI World Index, a broad global equity index that represents large and mid-capitalisation equity performance across all 23 developed countries, over a three-year rolling period to June 2022. This large drop-off in performance through 2022 has largely been attributed to ESG funds being ‘growth orientated’.

By way of an explanation, ‘growth’ funds are funds that i