The financial case for investing in sustainable investment funds has been growing over the past 5 years, but there was always a question over how they would perform in a crisis.  Well we’ve certainly experienced that over the past few months and sustainable funds have passed the test with flying colours.

Morningstar recently released a report* that showed a consistent outperformance of sustainable funds.  Over the 3 months to 31 March 2020, 745 sustainable funds in 7 categories were compared with their conventional counterparts, with 6 out of the 7 outperforming by 0.11% – 1.83%.

Over the 10 year period to 31 December 2019, 58% of sustainable funds outperformed their conventional counterparts.  Sustainable funds have also proven to be more durable – 72% of them survived the 10 year period, whilst only 46% of conventional funds survived the same period.

Morningstar’s definition of sustainable is quite broad, but nevertheless, it demonstrates the financial case for sustainable investing. Morningstar identifies the reasons for this outperformance as being underweights in oil and gas (which were hit by the rapid fall in demand) and the overweight in healthcare and technology; coupled with conservative financial management and competitive advantages of sustainably managed companies.  This makes them better equipped to withstand periods of uncertainty.

We agree. The Coronavirus crisis has accelerated trends that were happening anyway.  Sustainable funds are benefitting from long-term tailwinds, such as increasing numbers of older people driving the demand for healthcare, whilst also benefitting from the avoidance of long-term headwinds, such as increasing environmental taxes.  These trends are likely to be reinforced by the coronavirus epidemic.  Instead of being seen as a cost, sustainable investing is now viewed as an opportunity.

If you are interested in sustainable investment, please take at look at our Positive Pennine range of portfolios or contact our Business Development Manager Sean Fisher on 0800 161 5052.

* How Does European Sustainable Funds’ Performance Measure Up? June 2020


Positive Pennine is a trading style of Pennine Wealth Solutions LLP, which is authorised and regulated by the Financial Conduct Authority and is only available through authorised Financial Advisers.

Investors should remember that the value of investments, and income from them, can go down as well as up. Investors may not recover what they invest. Past performance is no guarantee future results. Any mention of specific securities should not be interpreted as a solicitation to buy or sell specific securities.