Is Your ESG Fund’s Devil Is in Its Details?

Like the EV battery fires that WSJ says 1sst responders say are harder than hell to put out, the devil may be in the details on ESG funds since “’Green’ Funds Cost Three Times More Than You Think.”

That’s because, author Jason Zweig explains: “Buying an ESG is a lot like buying in an index fund. That means investors are paying a lot for the small part that is different.” That’s because, he adds, these so-called “green, sustainable” funds “are nowhere near as pure as they purport to be and at the average ESG fund “the effective fees can be three times what’s reported,” at least, according to a new study cited.

Although Mr. Zweig concedes “some ESG funds take conservative or even ‘biblically responsible’ approaches that favor industrial & other old-fashioned sectors, most seek to avoid companies that emit excessive pollution, consume precious natural resources, squelch labor unions, downplay gender equality and so on.” How could that be? Says Zweig, they “tend to favor software & healthcare, while tilting away from oil & gas.” For instance, he claims, “sustainable US stock funds have 22.1% of their assets in technology & 15.4% in healthcare, but only 2.6% in energy, according to Morningstar. Non-ESG funds, meanwhile, hold 18.7% in tech, 14.3% in healthcare & 5.7% in energy.” Zweig concludes: “No wonder green funds out-performed over the past 5 yrs, earning an average 8.1% annually while non-sustainable funds grew at 6.9%. For most of that period, tech & healthcare boomed, while energy lagged.

Davd Soul