Looking to invest in a sustainable fund? The choices are many, but so are the considerations.
A fund might have a sustainable tag, but its meaning varies vastly from fund to fund, with differentiating nuances of green spread across endless investing goals. Jargon and terminology add to the confusion: SFDR, SDR, ESG, SRI. Stewardship, sustainability, climate, impact. Standardized methodology does often fail to capture this variation, and can sometimes lead to exclusions, or inclusions, that investors might not be aware of.
Meanwhile, some strategies score highly on these standardized sustainability metrics purely due to what they hold. Technology funds are good examples. And, what about returns? Does buying a green fund automatically mean that my returns will be lower than a non-ESG equivalent?
A consistency in strategy and returns are therefore essential when making a selection. In this article, we are highlighting 10 funds with the highest sustainability rating, a Gold Morningstar Medalist Rating, and, of course, the best returns this year.
In total, 42 different funds have a Morningstar Sustainability Rating of High and a Morningstar Medalist Rating of Gold available to investors in the UK. Across these funds, there are a total of 130 share classes to choose from. Below, we highlight the 10 funds with the best returns, across sterling, euro, Swiss franc and dollar share classes.
These sustainable funds are top-rated by Morningstar:
- FSSA Indian Subcontinent Fund
- Robeco QI US Climate Beta Equities
- Candriam Sustainable Equity US
- Stewart Investors Indian Subcontinent Sustainability Fund
- Virtus GF U.S. Small Cap Focus Fund
- Flossbach von Storch - Global Emerging Markets Equities
- Fidelity Funds - Global Equity Income Fund
- Multiflex SICAV - Singularity Fund
- M&G Investment Funds (1) - M&G North American Dividend Fund
- RBC Funds (Lux) - Emerging Markets Equity Focus Fund
Sustainable Gold-Rated Funds with the Strongest Returns
FSSA Indian Subcontinent Fund
- Morningstar Medalist Rating for FSSA Indian Subcontinent VI EUR Acc: Gold
- Morningstar Sustainability Rating: High
- Morningstar Category: India Equity
- Ongoing Charge: 1.14%
Over the past month, the actively managed FSSA Indian Subcontinent fund fell 3.03%, while the average India equity fund lost 5.53%. The fund placed in the 59th percentile for performance and edged out its benchmark, the Morningstar India Target Market Exposure Index, by 4.73 percentage points. The EUR 562 million fund has climbed 22.25% year to date, outperforming the average fund in its category, which rose 15.67%. The First Sentier fund has gained 15.19% over the past three years and gained 15.03% over the past five years.
Robeco QI US Climate Beta Equities
- Morningstar Medalist Rating for Robeco QI US Climate Beta Equities I € Cap: Gold
- Morningstar Sustainability Rating: High
- Morningstar Category: US Large-Cap Blend Equity
- Ongoing Charge: 0.38%
The EUR 327 million Robeco QI US Climate Beta Equities rose 1.93% over the past month. The fund beat its benchmark, the Morningstar US Large-Mid Cap Index, by 2.69 percentage points. Year to date, the Robeco fund rose 21.62%. The fund has climbed 11.01% over the past three years and gained 14.7% over the past five years.
Candriam Sustainable Equity US
- Morningstar Medalist Rating for Candriam Sustainable Equity US V USD Acc: Gold
- Morningstar Sustainability Rating: High
- Morningstar Category: US Large-Cap Blend Equity
- Ongoing Charge: 0.55%
The actively managed Candriam Sustainable Equity US gained 0.53% over the past month, outperforming the average fund in the US large-cap-cap blend equity category, which fell 0.37%. The fund placed in the 79th percentile for performance and beat its benchmark, the Morningstar US Large-Mid Cap Index, by 1.29 percentage points. The $2.1 billion fund has gained 19.85% year to date, while the average fund in its category is up 18.73%. The Candriam fund, which launched in June 2021, has gained 6.49% over the past three years.
Stewart Investors Indian Subcontinent Sustainability Fund
- Morningstar Medalist Rating for Stewart Investors Indian Subcontinent Sustainability VI CHF Acc: Gold
- Morningstar Sustainability Rating: High
- Morningstar Category: India Equity
- Ongoing Charge: 1.05%
Over the past month, the actively managed Stewart Investors Indian Subcontinent Sustainability fund fell 3.18%, while the average India equity fund lost 5.53%. The fund placed in the 57th percentile for performance and edged out its benchmark, the Morningstar India Target Market Exposure Index, by 4.58 percentage points. The CHF 9.5 million fund has climbed 17.95% year to date, outperforming the average fund in its category, which rose 15.67%. The First Sentier Investors fund was launched in Oct. 2023.
Virtus GF US Small Cap Focus Fund
- Morningstar Medalist Rating for Virtus GF U.S. Small Cap Focus I EUR Acc: Gold
- Morningstar Sustainability Rating: High
- Morningstar Category: US Small-Cap Equity
- Ongoing Charge: 0.96%
The actively managed Virtus GF US Small Cap Focus fund gained 4.32% over the past month, outperforming the average fund in the US small-cap-cap equity category, which fell 1.37%. The fund placed in the 18th percentile for performance and beat its benchmark, the Morningstar US Small Cap Extended Index, by 5.13 percentage points. The EUR 350 million fund has gained 16.22% year to date, while the average fund in its category is up 8.53%. The Virtus fund, which launched in June 2020, has gained 8.66% over the past three years.
Flossbach von Storch - Global Emerging Markets Equities
- Morningstar Medalist Rating for Virtus GF US Small Cap Focus I EUR Acc: Gold
- Morningstar Sustainability Rating: High
- Morningstar Category: Global Emerging Markets Equity
- Ongoing Charge: 0.95%
Over the past month, the actively managed Flossbach von Storch Global Emerging Markets Equities rose 0.27%, while the average global emerging markets equity fund lost 4.42%. The fund placed in the 5th percentile for performance and beat its benchmark, the Morningstar Emerging Markets Target Market Exposure Index, by 4.78 percentage points. The EUR 184 million fund has climbed 15.97% year to date, outperforming the average fund in its category, which rose 9.49%. The Flossbach von Storch fund has lost 1.31% over the past three years and gained 5.81% over the past five years.
Fidelity Funds - Global Equity Income Fund
- Morningstar Medalist Rating for Fidelity Funds - Global Equity Income I Dis USD: Gold
- Morningstar Sustainability Rating: High
- Morningstar Category: Global Equity Income
- Ongoing Charge: 0.89%
The $359 million Fidelity Global Equity Income fund fell 2.34% over the past month. The loss on the actively managed fund edged out the 3.2% loss on the average fund in the global equity income category, leaving it in the 23rd percentile for performance. The fund performed roughly in line with its benchmark, the Morningstar Global Markets High Dividend Yield Index. Year to date, the Fidelity fund rose 15.33%, while the average fund in its category rose 10.81%. The fund has climbed 9.05% over the past three years and gained 10.84% over the past five years.
Multiflex SICAV - The Singularity Fund
- Morningstar Medalist Rating for Multiflex SICAV The Singularity Z Acc: Gold
- Morningstar Sustainability Rating: High
- Morningstar Category: Global Large-Cap Growth Equity
- Ongoing Charge: 1.2%
The passively managed Multiflex The Singularity fund lost 1.47% over the past month, falling less than the average fund in the global large-cap growth equity category, which fell 2.4%. The fund placed in the 64th percentile for performance and edged out its benchmark, the Morningstar Global Growth Target Market Exposure Index, by 0.55 percentage points. The $117 million fund has gained 15.29% year to date, while the average fund in its category is up 11.92%. The Dara Capital fund was launched in June 2023.
M&G North American Dividend Fund
- Morningstar Medalist Rating for M&G North American Dividend GBP I Acc: Gold
- Morningstar Sustainability Rating: High
- Morningstar Category: US Equity Income
- Ongoing Charge: 0.61%
The actively managed M&G North American Dividend fund gained 2.89% over the past month, outperforming the average fund in the US equity income category, which fell 0.96%. The fund placed in the 63rd percentile for performance. The £855 million fund has gained 15.09% year to date, while the average fund in its category is up 15.15%. The M&G fund is up 11.44% over the past three years and is up 13.93% over the past five years.
RBC Funds (Lux) - Emerging Markets Equity Focus Fund
- Morningstar Medalist Rating for RBC Funds (Lux) Emerging Markets Equity Focus O1 USD Cap: Gold
- Morningstar Sustainability Rating: High
- Morningstar Category: Global Emerging Markets Equity
- Ongoing Charge: 0.80%
Over the past month, the actively managed RBC Funds Emerging Markets Equity Focus fund fell 3.72%, while the average global emerging markets equity fund lost 4.42%. The fund placed in the 66th percentile for performance and edged out its benchmark, the Morningstar Emerging Markets Target Market Exposure Index, by 0.79 percentage points. The $89 million fund has climbed 15.05% year to date, outperforming the average fund in its category, which rose 9.49%. The RBC fund has gained 3.84% over the past three years and gained 5.58% over the past five years.
Methodology
This is how we made our selection: all these funds are available across Europe, but some regions may vary. The Morningstar Sustainability Rating indicates the ESG risk level relative to its peers. To achieve a High rating, the fund needs to be in the top 10%. All these funds fit that brief. All funds have at least one share class with a Gold Morningstar Medalist Rating, and it must be quoted in sterling, euros, Swiss franc, or dollars.
This article was generated with the help of automation and reviewed by Morningstar editors.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
