Commentary
The environmental, social, and governance (ESG) investing phenomenon is undercutting the core purpose of financial institutions, jeopardizing the economic security of investors, politicizing our capital markets and private enterprises, and threatening the stability of our energy supply.
Simply put, financial firms and institutional investors should be solely focused on delivering maximum financial returns to investors so they can achieve the American dream. ESG funds are antithetical to this goal. For starters, ESG funds carry 43 percent higher fees on average versus non-ESG funds. Second, a recent study found that over the past five years, global ESG funds have underperformed the broader market by 250 basis points per year, an average 6.3 percent return compared with an 8.9 percent return. This means that an investor who put $10,000 into an average global ESG fund in 2017 would have realized a $1,750 lower return than if they had invested in the broader market. This stands to reason since ESG funds are less diversified, light on energy stocks, and overweight on technology stocks, meaning that a year like 2022 is catastrophic for investors because tech stocks significantly underperformed, and energy stocks significantly overperformed the market overall….