Sustainable Large-Blend Options That Have Beaten the Best
These 24 funds have high sustainability ratings and have beaten the Vanguard 500 Index Fund over the last decade.
Fund investors interested in incorporating sustainability into their portfolios face a problem virtually all investors have: It is hard to beat the market. Over the past decade, Vanguard 500 Index (VFINX), the lowest-cost index fund widely available to retail investors and the largest mutual fund in the world, outperformed 82% of the funds in the large-blend Morningstar Category. Among those that beat Vanguard 500 Index were 16 other index funds that happened to edge it out, mostly from tracking different large-cap or total market indexes. That leaves only 42 actively managed large-blend funds, 13% of the category, that have beaten Vanguard 500 Index over the past 10 years (through August 2016).
As you might imagine, these are generally high-quality funds. Because the Morningstar Rating is a category-relative measure of risk-adjusted performance, it is not surprising that 33 of these funds have Morningstar Ratings of 4 or 5 stars. Those ratings, earned over a period that still includes the financial crisis, reflect performance under a variety of market conditions. Morningstar analysts cover and assign Morningstar Analyst Ratings to 18 of the 42, and all 18 receive Analyst Ratings of Gold, Silver, or Bronze. A Morningstar Medalist fund is one that our analysts believe will outperform its peer group and relevant benchmark over the coming years, based not only on past performance but also on a broad assessment of the fund’s management, investment process, resources, and cost. In sum, this group of 42--especially the 18 covered by Morningstar analysts--have proved themselves to be excellent core holdings over the past decade and can make a pretty good case for themselves being high-quality offerings going forward.
Jon Hale does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.