A report by Bank of America Securities says that ESG stocks have outperformed in the current bear market.
The report says that from the S&P 500’s peak to today, stocks in the top 25% of ESG rankings outperformed the market by over 5 percentage points. In Europe, ESG indices outperformed their benchmarks year-to-date and the top 50 most overweighted stocks by ESG funds have outperformed the most underweighted by more than 10ppt.
Lower ranked ESG companies in the US, Europe and Asia have also seen larger downward earnings revisions for 2020/21 expectations than higher ranked companies. This trend is particularly strong in the discretionary, tech, REITs & utilities sectors.
BofA Securities says their client flows data shows despite record ETF selling over the last few weeks, ESG funds have seen inflows for ten straight weeks with ESG ETF assets remaining up nearly 5% year-to-date, while S&P 500 ETFs have seen a decline by over 30%.