New Responsible Ratings Index examines US funds across researchers

ESG Clarity US and Last Word Research ranking top performing funds by their ESG ratings from three different research companies.

InvestmentNews’ ESG Clarity US is releasing its inaugural Responsible Ratings Index (RRI), which offers a view into the top-rated and top-performing U.S. funds.

While research firms are increasingly rating responsibly invested funds based on their environmental, social and governance credentials, as well as their performance, volatility and company sustainability agendas, there hasn’t been a tool that presents multiple ratings for funds.

In partnership with sister company Last Word Research, ESG Clarity US pores through fund ratings from Morningstar,   MSCI  and Lipper/Refinitiv to come up with a table that includes ratings of 420 funds. Below are the 20 that scored the highest among all three evaluators through July 20 and the full list can be found here.

The RRI will be rebalanced each month to reflect changes to the individual ratings, but also to encompass the growing number of data providers that are beginning to award ESG funds with a score.

“While there are several ratings agencies that provide their own ranking, there is no one stop shop for investors to find the top ESG funds until now,” said Lottie McGurk, quantitative researcher at Last Word Research. “Through combining the scores of various ESG ratings agencies, the Responsible Ratings Index provides investors with a view of which funds consistently receive the top ESG scores across all the ratings agencies.”

Only funds that receive a four- or five-star rating from Morningstar’s overall performance ranking will make it onto the list. These funds have consistently performed well during the past three years, she said.

“The RRI gives advisers a tool to find high performing funds that take ESG factors into consideration, and it should give them the confidence that multiple research teams weighed in on that conclusion,” said Liz Skinner, editor of ESG Clarity US.

This tool was initially created for European funds by ESG Clarity.

[More: Methodology behind new Responsible Ratings Index]