Sustainable Bottom Line: For sustainable investors, March 2026 performance results reinforce the value of deeper analysis and diversification across asset classes and across sustainable sub-themes.
Notes of Explanation: # denotes index fund. Funds are listed in descending order based on March 2026 total return results. GRN is an Exchange-Traded Note (ETN). Sources: Morningstar and Sustainable Research and Analysis LLC.
Observations:
• March 2026 was a stressful month for equity and fixed income investors generally. Sustainable investors were no exception. The S&P 500 was down almost 5%, foreign stocks, including developed and emerging markets as measured by the MSCI ACWI ex USA Index, dropped by almost 11% while intermediate, investment grade bonds, according to the Bloomberg US Aggregate Bond Index, gave up 1.8%. These outcomes dragged first quarter returns into negative territory as well. In some cases, sustainable investors experienced returns that were even lower for the month and first quarter.
• Positive returns were extraordinarily scarce across the universe of 541 mutual funds and ETFs/1,103 funds/share classes consisting of focused or labelled sustainable long-term funds as classified by Morningstar, accounting for just 2% of the funds. Returns ranged from a low of -17.2% registered by the VanEck Copper and Green Metals ETF (the fund is still up 32.1% in Q1 and 95.13% over the trailing 12-months) to a high of 5.6% recorded by the Neuberger Energy Transition and Infrastructure ETF, the best performing fund in March that was up 42.1% in the first quarter and 26.1% over the trailing 12-months.
• While the broad universe of sustainable funds largely struggled, 11 funds, including eight thematic funds, managed to finish the month in the black. Even among these 11 funds, gains were modest, averaging just 1.6% for the month. That said, their trailing average twelve-month returns were an outstanding 28.2%. These include funds of varying sizes focused on energy transition/clean energy (5 funds), carbon allowances and commodities (3 funds) as well as ultra-short, fixed income securities (3 funds). The small grouping includes six actively managed and five index tracking funds.
• While focused on the energy transition/clean energy theme, a look inside the portfolios of the five funds that fall into this thematic category reveals that they are investing in entirely distinct segments of the energy transition: US energy infrastructure and grid buildout (NBET), North American solar technology and clean energy (ACES), and global wind energy with a strong European tilt (FAN), China only clean tech (KGRN) and the most diversified of the funds, with a focus on a global universe of companies that distribute, produce, or provide technology or equipment to support the production of energy from solar, wind, hydrogen, and other renewable sources (FRNW).
• For sustainable investors, the month reinforces the value of deeper analysis and diversification not just across asset classes, but across sustainable sub-themes, because not all green strategies behave the same way under varying market conditions.
• Of the 11 funds, only four funds, EMNT, CVSB, KCSH and KERN, incorporate explicit, documented sustainable investing processes, including exclusions based on fund specific parameters and/or engagement with issuers. The remaining seven funds are sustainability themed. For further details regarding KCSH, EMNT, and CVSB, refer to Chart of the Week – February 23, 2026: Ultrashort Bond Funds.
