7 Sustainable Large-Value Funds
These Medalist funds could be good fits for investors considering sustainability factors.
U.S. large-cap value can be a difficult area for investors wanting to incorporate sustainability into their portfolios. There are only a few funds with explicit sustainable or responsible investment mandates in the U.S. large-value Morningstar Category, and conventional funds often have higher exposure to sectors like energy and utilities, which include companies with heavier carbon footprints and environmental risks. Rather than give up altogether on a large-value allocation or concede it to a fund that doesn't reflect sustainability concerns at all, investors can use the Morningstar Sustainability Rating to identify funds that are holding companies managing their environmental, social, and governance, or ESG, risks and opportunities relatively well.
Funds in the U.S. large-value category with the highest Sustainability Rating of 5 globes tend to have less exposure to energy, utilities, and financial services than those with lower ratings, as can be seen in Exhibit 1. They also tend to be less deep-value and higher-yielding, with larger average market caps. While we can't say that they would have earned 5 globes in the past because our rating is new and based on their most recent portfolios, their track records show they are less risky and have better overall Morningstar Ratings.
Jon Hale does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.