Sustainable investment with the theme of environmental protection and social co-prosperity has become the protagonist of the mutual fund market during the epidemic. However, according to the Morningstar Index, only 27% of the Morningstar Sustainability Index performed better than expected last year, that is, 36 of the 134 indexes outperformed the overall, lower than 57% in 2021 and 75% in 2020, reflecting sustainable development. Investment last year could not escape the impact of the stock market downturn and the cycle of interest rate hikes. International players are discussing multiple adjustments, using multiple design incentives to allow retail investors to hold stocks for a long time.
The Morningstar research team pointed out that it has been 5 years since the Morningstar Index began to track the risk/return status of sustainable development issues. Zero carbon emission is an initiative of European countries and multinational financial groups, making the carbon-intensive energy and utility industry the only rising stocks in the stock market in 2022.
Among the Morningstar Indexes, there are multiple series of indices that combine ESG standard selection and/or weighted constituent stocks, a total of 137 unique indices spanning stocks and bonds, of which 127 indices have 5-year performance history, which can be roughly divided into into four categories, namely ESG risk, climate, impact and value alignment. If the research team extends the time point to 5 years, 80% of the ESG-related indexes will outperform the market.
Looking at the S&P 500 sustainability index, among the 60 indices with ESG directly linked to their product names, 37 have maintained a positive performance this year, with the best return of 7.97% and the bottom of -8.6%. According to the analysis, the “S&P Eurozone Large and Mid-Cap 2050 Net Zero Climate Transition Index Environmental Social Governance (ESG)” with the best returns, in addition to directly locking in net zero, also includes the spillover effect of the euro exchange rate this year, which is also It is difficult to prove that 7.97% are all benefited from the contribution of the stock market recovery since the first quarter of this year.
The director of the financial industry pointed out that the investment portfolio of ESG mutual funds pays more attention to the social influence and sustainability of the company. During the epidemic period, people’s fear of infection has shifted their minds, coupled with the promotion of wealth management in the financial industry, capital flows into ESG Funds increased significantly. Now that the global epidemic prevention measures are generally unblocked, it will still return to fundamentals. For example, the “Morningstar US Sustainability Index” will outperform most stocks in 2022, largely due to avoiding Tesla and Amazon. big stock.
For the domestic ESG index review, the “Taiwan Sustainability Evaluation” model constructed by the Corporate Sustainability Research Center of the Taipei University Business School, and the relevant information on the Taiwan version of the ESG index evaluation in cooperation with Taiwan Index Company, in terms of the four major industries , the financial industry and the electronics industry have the highest proportion of companies rated A to AAA.
According to the analysis of the research team, the financial industry is regulated by stricter laws and regulations, and the competition is the most intense. It needs to think about how to break out from the top group of ESG performers; the electronics industry is required by the supply chain of international customers. Even so, sustainable investing is not monolithic, and approaches vary in motivation, implementation, and application. After expert discussions, readjusting the elements of the portfolio and the proportion of constituent stocks has become the largest project in each index.
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