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Mutual Funds Rated by Social Impact
As fund managers begin to communicate the impact of their financial offerings, Real Impact Tracker goes beyond marketing to evaluate which firms generate real impact, judging how funds create positive impact on top of financial success for their clients.
Unlike other sustainability ratings that assess what companies a fund owns, the Real Impact Tracker rating assess a what a fund does.
Real Impact Tracker arrives to a galvanized US public that is seeking new avenues to make a positive difference, shining a spotlight on personal investments as a powerful tool with untapped potential.
Mutual funds have become the largest component of public company ownership, with retail investors holding 89% of mutual funds, including over 95 million Americans.
Our list (found at www.realimpacttracker.com) aims to help individuals better understand which funds best advance their values and to provoke informed discussions between individuals and their financial advisors.
Examples of real impact include a 2015 coalition of investors successfully pushing for an end to forced child labor in Uzbek cotton fields, and the 2014 "Aiming for A" coalition pressuring energy companies to disclose climate risk.
This initial sample considers the largest 70% of fund managers by AUM which have a US listed public equity fund, plus traditional US SRI firms. Highlights include:
• The top of our list finds U.S. ESG specialist firms and large European asset managers with US offerings leading the way on impact.
• A select few large U.S. fund managers are differentiated from their peers.
• The highest impact funds successfully track the returns of their benchmarks, meaning individual investors can have more positive impact through their investment choices without sacrificing financial returns.
Two funds tied for first: Pax Global Environmental Markets [PXEAX], sub-advised by UK-based Impax, and Walden Equity [WSEFX]. These two manage under $1b each indicating a significant opportunity exists for retail investors to learn more about the financial and societal impact of their choices.
Also, BlackRock and State Street lead among the largest US asset managers, while the bottom of the rating also offers interesting insights.
For instance, the Thrivent Large Cap [AALGX] offered no evidence of ESG integration nor engagement. A few other specialty sustainability funds from well-known fund managers also fell short in our analysis, including Sentinel Sustainable Core Opportunities [MYPVX],American Century Sustainable Equity [AFDIX], Oppenheimer ESG Revenue ETF [MSIGX], and the Fidelity Select Environment and Alternative Energy Portfolio [FSLEX].
At the bottom of our list was the Dodge & Cox Stock Fund [DODGX], one of the largest actively managed funds in the US with $67.2B in equity under management. Beyond not contributing to impact, the fund has underperformed the S&P 500 over the past 10 years.