13 May Sustainable Portfolios Performance Summary: February 2017
New Equity Market Highs Reached in February; Fixed Income Gains Too
Even as political uncertainties continued to make headlines, equity markets achieved record highs across the globe during the month of February. Strong corporate earnings in the US and a weaker Euro combined with higher commodity prices that foreshadowed positive earnings growth for European companies drove prices higher. The S&P 500 Index gained almost 4% while the MSCI EAFE NR Index added 1.43%.
On the fixed income side, the Federal Reserve turned more hawkish, elevating the possibility of an interest rate hike in March, in light of strong labor market data, rising inflationary pressures and fiscal stimulus plans being considered by the Trump administration. Central bankers in Japan and England were also articulating slightly more hawkish monetary policies. Against this backdrop, government and corporate bonds performed reasonably well. The Bloomberg-Barclays Aggregate Bond Index gained 0.67%.
Sustainable Portfolios Performance Summary
The Aggressive Sustainable Portfolio (95% stocks/5% bonds) gained an impressive 4.26% during the month of February, buoyed by the strong performance of the stock market during this interval. This exceeded the results achieved by an equivalent, non-sustainable index, by 0.39% or 39 bps. The Moderate and Conservative portfolios also experienced gains, edging up 3.35% and 1.84%, respectively. Both the Vanguard FTSE Social Index-Investor Shares and the TIAA-CREF Social Choice Bond Fund-Retail outperformed their non-ESG index counterparts. On a cumulative basis, the three portfolios are up 88.86%, 60.66% and 28.44%, respectively.
Monthly Sustainable Fund Flows
Total net assets sourced to sustainable funds, consisting of mutual funds, ETFs and ETNs, stood at $203.2 billion at the end of February. Included in this total is about $198.2 billion, or 98% of assets, invested in mutual funds while about $5.0 billion is invested through ETFs and ETNs. Within this combined sector, index funds have attracted some $12.0 billion in assets or about 6%.
Equity funds continue to dominate, representing $186.6 billion (92%) whereas fixed income funds held $16.6 billion in net assets under management.