The Bottom Line: Top 10 focused sustainable mutual funds based on 2024 gains in net assets, largely equity mutual funds, gained $14.9 billion in assets.
Notes of explanation: *Refers to index fund. @Fund classified as a large cap blended fund. # Fund is one of the most highly scored focused sustainable large cap blended fund by Sustainable Research and Analysis based on a combination of the following screens: Management company, years in operation, total return performance, expense ratio and fund size. In connection with the Pioneer Fund, highest rank applies to A, K and Y shares. Sources: Morningstar Direct, Sustainable Research and Analysis LLC.
Observations:
• The top 10 focused sustainable mutual funds based on 2024 gains in net assets, nine equity funds and one bond fund, added $14.9 billion in net assets. The gains are juxtaposed against the focused sustainable mutual funds universe of 1,844 mutual funds/share classes that recorded a net gain of $10.2 billion in net assets on a year-over year basis. Six of the ten funds represent the largest focused sustainable mutual funds as of December 31, 2024, including Parnassus Core Equity, Vanguard FTSE Social Index Fund, Brown Advisory Sustainable Growth Fund, Pioneer Fund, DFA US Sustainability Core 1 and the Nuveen Lage Cap Responsible Equity Fund.
• The gains in net assets were led by activity linked to institutional investors that accounted for 52% of the net gains in 2024. Institutional investors in mutual funds account for $138.0 billion in net assets, or 56% of sustainable mutual fund assets under management. Institutional investors are measured based on their designated institutional share classes.
• Dominated by large cap blended funds, the ten funds include just one bond fund, the $3.7 billion Calvert Bond Fund, classified as an Intermediate Core-Plus Bond Fund as the fund can invest in securities of any maturity as well as non-investment grade securities up to 20%. Also, the ten funds segment consists of seven actively managed and three index tracking funds.
• The nine equity funds generated outsized returns in 2024, averaging 22.26%, almost twice the average annual gain of 13.1% generated over the last ten years by the S&P 500 Index. The past year’s results compare to an increase of 25.02% for the S&P 500 Index and 24.02% recorded by the S&P 500 ESG Index. The S&P 500 posted its fourth best gain over the last decade. This was against a backdrop of better than average expected earnings growth for 2024 and growth of earnings for the fourth straight year, juxtaposed against geopolitical uncertainty, doubts about the economy’s strength and lingering concerns about inflation and interest rates.
• Returns ranged from a low of 18.24% posted by the Nuveen Large Cap Core Responsible Index Fund R6 to a high of 26.01% delivered by the Vanguard FTSE Social Index Fund I. The Calvert Bond Fund R6 added 3.17% versus 1.25% achieved by the Bloomberg US aggregate Bond Index and 1.23% recorded by the Bloomberg MSCI US Aggregate ESG Focus Index.
• Of the large cap blended funds, three funds, including the Vanguard FTSE Social Index, the Fidelity US Sustainability Index and Pioneer Fund (selected share classes), are the most highly scored by Sustainable Research and Analysis based on a combination of the five screens that include management company quality, years in operation, total return performance over one, three and five years, expense ratio as well as fund size.
