Sustainable funds dominate FE ratings in latest rebalance

17 sustainable funds awarded top Five Crown Rating for the first time

Sustainable funds continued to dominate the top performers in the latest quarterly review of FE Fundinfo’s Crown Ratings.

Overall, there are now currently 397 funds from the wider universe with the highest Five-Crown rating, as 15 gained the status for the first time and nine moved from the lowest one-crown to the highest level.

However, 17 of these new entrants to the Five-Crown club had an ethical or sustainable focus, including the BNY Mellon Sustainable Global Equity Fund and Sustainable Real Return, and the Jupiter Global Sustainable Equities Fund.

“The strong performance of sustainably-focused funds has largely come about from a combination of favourable market conditions and growing interest in ESG investing from both investors, who are looking beyond returns and wanting to know where their money is going, and institutions and fund groups who are looking to diversify their propositions,” said FE Investments research manager Charles Younes.

FE fundinfo Crown ratings are calculated by building up a ‘Crown Score’. The score is made up of three parts, and each part is calculated by reference to a benchmark for the fund. Once the benchmark is assigned, FE fundinfo then applies three tests (an alpha based test, a volatility score and a consistency score) to the total return history of the fund. Three years of history is required to carry out these scores, so any fund with less history than this will not qualify for a rating.

Funds are assigned ratings based on their total scores, according to the following distribution:

  • the top 10% – 5 FE fundinfo Crowns
  • the next 15% – 4 FE fundinfo Crowns
  • the next 25% – 3 FE fundinfo Crowns
  • the next 25% – 2 FE fundinfo Crowns
  • the bottom 25% – 1 FE fundinfo Crown

Other sustainable portfolios awarded a new Five Crown Rating include Aegon Global Sustainable Equity, Baillie Gifford Stewardship and Positive Change funds, Impax Environmental Markets, Fundsmith Sustainable Equity and Pictet Global Environmental Opportunities.

Sustainable funds with new Five Crown Rating
AB SICAV I Sustainable Global Thematic Portfolio
Aegon Global Sustainable Equity
Baillie Gifford Global Stewardship
Baillie Gifford Positive Change
Barclays Charity
BNY Mellon Sustainable Global Equity
Brown Advisory US Sustainable Growth
Fundsmith Sustainable Equity
Impax Asian Environmental Markets
Impax Environmental Markets
Janus Henderson Global Sustainable Equity
Jupiter Global Sustainable Equities
Montanaro Better World
Montanaro Better World Distribution
Morgan Stanley Emerging Leaders Equity
Pictet Global Environmental Opportunities
Scottish Widows Environmental Investor

Younes highlighted ESG investing is relatively new for large parts of the industry and funds are only just falling into their screens.

“Many sustainable funds are now coming into maturity, having been launched three or more years ago and are now eligible for a crown rating. That so many have been rated so highly and so soon, is testament to the strength of their proposition and their ability to capitalise on current market conditions,” he added.


Natalie Kenway

Natalie is editor in chief at MA Financial covering ESG Clarity, Portfolio Adviser and International Adviser. She was previously global head of ESG insight for ESG Clarity and has been an investment journalist...