The Top Performing Ethical & Sustainable Investment Funds of 2020
2020 was an extraordinary year, and this was no less true in financial markets. Even with one of the most dramatic market declines in decades in spring, most global markets ended the year at record levels. Funds with a specific ethical or sustainable focus led the way relative to both the performance of the market in general, and against many other thematic or generalist funds. Healthcare, renewable energy and tech-related solutions performed well as sectors, benefitting many ethical and sustainably- focused funds.
Below we highlight the year's 10 best performing funds in our database. We also take a deeper look into the top 5 to see what has driven their stellar performance.
1. BNP Paribas Energy Transition
The BNP Paribas Energy Transition fund has been around since 2013, though in September 2019 underwent a major transformation, with its investment focus materially changing and a new investment team coming in. Since then, the fund's performance has been exceptionally strong, with a bias towards US growth companies in the energy transition space. These have particularly benefitted in the past several months as a result of Joe Biden's and the Democrat's announced climate plans. The fund's returns have been broad-based , with meaningful positions in a fair number of companies, all of which have posted strong performance over the past year.
2. iShares Global Clean Energy ETF
Unusually for an ETF, the iShares Global Clean Energy ETF is fairly concentrated, investing into only around 30 companies. This can largely explain its very strong performance over the past year, and even more so when you consider the returns of its largest holding, Plug Power. Plug Power's focus is towards developing hydrogen fuel cells to replace conventional batteries in electric-powered equipment and vehicles. Hydrogen is often touted as the next frontier for renewable energy, though remains an undeveloped technology. While the iShares ETF is geographically diversified, there is a bias towards US companies (c.30%), with these companies benefitting from the country's new climate plans.
3. Quaero Capital Accessible Clean Energy
The Quaero Capital Accessible Clean Energy fund, like the top two performing funds of 2020, also exclusively focuses on companies engaged with the clean energy transition. Similar to the iShares ETF, Plug Power was a major factor behind its very strong performance over the year, though its other top 10 holdings- which make up about 50% of the fund's weight- all posted >30% in the year. The fund has recently reduced its holding in Plug Power and increased its position meaningfully in Sunrun, a US provider of residential solar panels and home batteries.
4. Credit Suisse Digital Health Equity
The only purely focused healthcare fund in the top 5 performing funds in our database, Credit Suisse Digital Health Equity has benefitted from the strong general performance in the technology and healthcare sectors across 2020. Unlike the other funds on this list, the Credit Suisse fund is less concentrated with many individual holdings, though very focused on one specific theme- Digital Health.
5. Baillie Gifford Positive Change
The Baillie Gifford Positive Change fund is the only generalist fund in the top 5. It has no specific sector or geographic focus, though is invested heavily into both healthcare and companies with a focus on the energy transition, with a bias towards the US. The fund is fairly concentrated, with its top 10 holdings making up over half of its capital invested. This has proved to be beneficial, as its top holdings Tesla and M3 have been the driving forces behind performance. The managers maintain conviction in both of these companies.