Both of the two United States equity funds with the highest returns in the year 2020 concentrate on renewable energy, in an affirmation for investors who have pursued solid environmental, social and governance values for their holdings. Thanks to a rise in the valuation of solar energy securities, which themselves have experienced tailwinds from the strong inflows into the ESG investment strategies, the two funds, both managed by Invesco, the asset manager, have increased in value by more than three times.
As reported by Morningstar, the Invesco Solar exchange-traded fund that has $3.7bn in assets, has risen 238% since the beginning of 2020 as of Christmas Eve, leading the league table of the United States ETFs as well as mutual funds which invest in equities. Two suppliers of residential solar energy, Enphase Energy, that has increased by almost 600% in volume, and Sunrun, which is up 400%, are some of the top holdings of ETF. The Invesco WilderHill Clean Energy ETF that yielded 220% was the second-highest paying fund. FuelCell Energy, which develops and manufactures power plants, whose stocks in 2020 have grown almost 400%, is one of the biggest holdings.
“Coupled with the rapid decrease in renewable energy prices, a Joe Biden win has led to even further appreciation of both the solar as well as clean energy funds,” stated Rene Reyna, who serves as the head of Invesco’s thematic as well as specialty product strategy. “Downtrends should be anticipated” in the midst of these 2020’s good results, Mr Reyna added: “The economic fundamentals within the renewable energy industry endorse our belief, and we’re in the initial stages of a long-term secular high growth.”
As per the Institute of International Finance, that said the pattern had intensified in recent times as investors expected active support from the new Biden administration, global funds carrying ESG investments have soared over 50%, above $1.3tn, since the close of 2019. The ESG fund positions number 5 on the inflows’ league table, through dollar sum, out of equity funds in the United States, highlighting the strategy’s banner year. According to Morningstar, iShares ESG Aware MSCI USA ETF of BlackRock attracted $9.3bn net inflow in the year to 30th November, raising its overall net assets to about $12.7bn.
The fund is intended to track S&P 500, the standardized United States stock index, widely, even though it excludes stakes in sectors such as tobacco and low ESG firms. As a convenient entry point for ESG investment, BlackRock has sold it to financial advisors and customers. It is among those claiming that accelerating inflows into these funds is building momentum that would push up common ESG stocks. “Collectively, companies which have the highest ESG ranking outperformed” during the epidemics market downturn in the month of March and even beyond, said Romain Boscher, Fidelity International’s global chief equity investment officer.