Bringing you live news and features since 2006 

New Scientific Beta study shows sustainable investing underperforms standard index funds


A new study from Scientific Beta, entitled “Sustainability Alpha in the Real World: Evidence from Exchange-Traded Funds”, assesses the performance of sustainable investing from a value-weighted portfolio of ETFs that follow systematic ESG investing strategies in the US equity market.

The study finds that sustainable investing did not deliver higher returns than standard index funds. Widely commented periods of outperformance, such as the year 2020, can be explained in large part by industry effects, such as a tilt towards technology stocks. Over the past decade, such periods of outperformance are offset by corresponding periods of underperformance, leaving ESG investors with returns of -0.2 per cent compared with the market index and -0.7 per cent compared with a benchmark with matching industry exposure, the authors say.

Commenting on the study, Felix Goltz, co-author, and Research Director at Scientific Beta, says: “For investors looking to integrate ESG objectives in their investment process, it is crucial to question what impact this would have on their portfolio’s financial performance. The existence of numerous methodologies to integrate sustainability, which may not be representative of actual practice, has made it challenging to assess this impact empirically. Our study provides an assessment of the ‘real-world’ performance of sustainable investing, drawing on information from the market of exchange-traded funds. We encourage investors to consider such ‘real-world’ results and be aware of the limitations of analysis that selects particular funds or creates stylised strategies that may not reflect the real world of sustainable investing.”

Latest News

Mirae Asset Securiites purchased European ETF market maker GHCO in May, 2023 and has now promoted Alex Gladkow from Chief..
The European Fund and Asset Management Association (EFAMA) has published its latest monthly Investment Fund Industry Fact Sheet, which provides..
In line with the report from Computershare this week which revealed the Aussie love of all things ETF, our non-North..
There were 10 new ETF offerings launched for the week, each with a distinct value proposition for investors.  Detailed below..

Related Articles

Katie Stockton, Fairlead Strategies
Connecticut-based Fairlead Strategies was the first ETF of ETFs winner in the ETF Express US awards, representing a new development...
Australian flag
A new report published by global financial services company Computershare has revealed key trends in the Australian ETF market during...
Eric Balchunas, Bloomberg Intelligence
ETFs will likely see an uptick of trillions in assets to their already strong flows over the next decade as...
Kim Gibb, Prescient Management Company
Prescient Management Company, an investment fund platform provider in South Africa, has launched the country’s first full-service, co-named platform for...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by