ESG-approved funds compiled by the Securities and Futures Commission (SFC) in Hong Kong have outperformed their peers, according to data from Morningstar Direct.
First published in December 2019, the list of ESG-approved funds includes products that meet new ESG disclosure requirements aimed at countering greenwashing. These disclosure requirements include the fund’s key investment focus, ESG analysis and evaluation methodologies, and what the firm believes to be relevant “green” or ESG criteria.
Currently, the number of green and ESG funds identified by the SFC has reached 43, having an average return of 28.7% in 2020. In comparison, for the list of around 900 SFC-authorised equity funds in Hong Kong, they returned an average of 19.2%, according to Morningstar.
This is also true longer term. The ESG funds had a three- and five-year annualised return of 12% and 14.1%, respectively, while the 900 equity funds had an annualised three- and five-year return of 7.3% and 12.7%.
Of the 43 ESG funds, 35 belong to the equity category, six from fixed income and only one under mixed-asset.
The top-performing ESG funds in 2020 include the BNP Paribas Energy Transition Fund, the Global X China Clean Energy ETF, Blackrock’s BGF Future of Transport and the Ninety One GSF Global Environment Fund, Morningstar data shows.
On the flipside, the three bottom performing funds are the Hang Seng Corporate Sustainable Index Fund, the Pictet Water Fund and the Allianz Emerging Markets SRI Bond Fund.
A total of 17 fund management companies are on the list, with Pictet Asset Management and Allianz Global Investors having the most number of ESG-approved funds (six each), followed by Fidelity (five), and Blackrock and BNP Paribas Asset Management (four each).