Sustainable Stocks Outperforming Traditional Investments

01 April by


Morgan Stanley have recently released a report which highlights that Sustainability Stocks are outperforming a number of other, traditionally more trusted investments – The Report – ‘Sustainable Reality‘ states; “Investing in sustainability has usually met, and often exceeded, the performance of comparable traditional investments. This is on both an absolute and a risk-adjusted basis, across asset classes and over time, based on our review of US-based Mutual Funds and Separately Managed Accounts (SMAs).”

The study showed that sustainable equity mutual funds, which invest principally in stocks, met or exceeded the median returns and were less volatile or equally as volatile 64 per cent of the time during the seven years examined.

The findings come after a survey by Morgan Stanley last month showed that nearly three-quarters of investors believe that ethical companies can be more profitable and are better long-term investments. But at the same time, more than half said that sustainable investing could require a financial sacrifice.

Audrey Choi, Chief Executive of the bank’s Institute for Sustainable Investing, said the latest report dispels that myth.

“Sustainable investing presents the opportunity for individuals and institutions to align their investments with their values, but there are clearly many investors who have reservations over whether sustainable investing will require them to sacrifice investment performance,” she said in a statement.

“Ultimately, we believe that sustainable investing is simply a smart way to invest, and our review shows preconceptions regarding sub-par performance are out of step with reality.”

A growing number of investors are exploring sustainable investing. In 2012, $1 out of every $9 of US assets under professional management was invested in some form of sustainable investment, primarily in public equities. In 2014 that number increased to $1 out of every $6 – to a total of $6.57 trillion now invested sustainably.

Read full report