Sustainable Bottom Line: Based on their absolute performance results, focused sustainable long-term funds are expected to end 2025 on a strong to very strong note.
Notes of Explanation: Funds include mutual funds and ETFs. Sources: Morningstar, Sustainable Research and Analysis LLC.
Observations:
• Based on their absolute performance results and barring any material shifts over the last three days of the year, focused sustainable long-term funds, including mutual funds and ETFs, are expected to end 2025 on a strong to very strong note, exceeding their average total returns recorded over the last five years to December 2025.
• Based on the average performance results recorded through the end of November, sustainable U.S. Equity Funds, International Equity Funds and Taxable Bond Funds are each expected to exceed their average 5-year results. At the low end of the range, the average total return results posted by sustainable U.S. Equity Funds exceed their 5-year average by 1.7%. International Fund and Taxable Bond Funds will exceed their average 5-year results by 14.7% and 6.1%, respectively.
• The five-year interval experienced dramatic highs and lows for each of the three broad-based investment categories. In 2020, the year of COVID, equities as well as bonds sustained significant declines. U.S. and international equity funds recovered over the following one-to-two years while bond funds required a recovery period of almost three years.
• While it’s based on a crude comparison, the average cumulative performance of the three investment categories is expected to fall short of their primary conventional securities market indices in 2025.
• That said, the average cumulative performance of taxable bond funds over the almost five years to November 2025 exceeds by 4% the corresponding results achieved by the Bloomberg US Aggregate Bond Index. This is not the case for the two equity-oriented fund categories, U.S. Equity Funds and International Equity Funds, that posted cumulative results of 56% and 31% versus 80% registered by the S&P 500 and 42% recorded by the MSCI ACWI ex USA Index.
