PODCAST: Best ESG Companies, Funds. And More…


The 50 Best ESG Companies list from the US Investor’s Business Daily. Its top picks are Nvidia with a 12-month gain of 206%. Pool with a 72% advance and Salesforce.com which is up nearly 80%. Another article picks the renewable energy stocks Hannon Armstrong Sustainable Infrastructure Capital, NextEra Energy, and Atlantica Sustainable Infrastructure. And more

PODCAST: Best ESG Companies, Funds. And More…

Transcript & Links, Episode 44, November 6, 2020

Hello, Ron Robins here. Welcome to podcast episode 44 published on November 6, 2020, titled “Best ESG Companies, Funds. And More…”— and presented by Investing for the Soul. investingforthesoul.com is your site for vital global ethical and sustainable investing news, commentary, information, and resources.

Remember that you can find a full transcript, links to content – including stock symbols and bonus material – at this episode’s podcast page located at investingforthesoul.com/podcasts.

And Google any terms that are unfamiliar to you.

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1. Best ESG Companies, Funds.

To start things off we have a great new article naming the best ESG companies by Investor’s Business Daily. The article is titled As ESG Investing Gives 2020 A Sustainable Spin, 50 Best ESG Companies Revealed. It’s written by Alan R Elliott. Here are some quotes from Mr. Elliott.

“The list highlights 50 stocks that boast both high ESG ratings and superior Investor’s Business Daily (IBD) stock ratings of fundamental and technical strength…

These ESG stocks have been especially strong, with the top three stocks on IBD’s Best ESG Companies list each having a Composite Rating of 99. In terms of stock performance, at the top of the IBD ESG list, Nvidia (NVDA) has a 12-month gain of 206%. Pool (POOL) has a 72% advance. Salesforce.com (CRM) is up nearly 80%. The next five stocks on IBD’s ESG list averaged a 12-month gain of almost 70%. Nvidia and Pool are currently on the IBD 50 list of the best growth stocks…

Profiles

[Also], see the profiles of Nvidia, Salesforce.com, West Pharmaceutical Services (WST), Adobe (ADBE) and Best Buy (BBY)…

MSCI ESG Research has ranked companies according to available information pertaining to environmental, social and governance criteria… Those ratings provide the basis for MSCI’s more than 1,500 equity and fixed-income ESG indexes. The earliest of those, the MSCI KLD 400 Social Index, first launched as the Domini Social 400 Index in 1990.

IBD cross-references MSCI’s rankings with its database of all stocks to determine the 50 most ESG advanced companies in the growth stock realm… the MSCI ESG ratings compare companies only to other companies in their industry. An AAA rating means your ESG efforts put your company ahead of industry peers.

Also keep in mind, some companies rank high due to social issues such as health care, company leave and diversity policies for their workforce, while they may be less environmentally savvy then a lower-ranked peer.

To date, no standardized set of reporting requirements relates specifically to the countless aspects of corporate governance encompassed under the ESG rubric. That makes ranking difficult, and more of an art in certain situations than a science.” End quotes.

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2. Best ESG Companies, Funds

Though the title of this article is 3 Renewable Energy Stocks to Buy Ahead of the Election, the authors say it still makes sense to consider these three stocks after the election too. It’s published in The Motley Fool.

As usual, I’ll mention the stock followed by quotes from the analyst concerning that stock.

1) Travis Hoium likes Hannon Armstrong Sustainable Infrastructure Capital (NYSE: HASI)

Like any company that invests in renewable energy projects, Hannon Armstrong is in the business of generating a yield from its investments…

The company can take equity or debt positions in projects, finance efficiency improvements, or even pay for ecological restoration. This means management can shift dollars to where it can get the best return for the risk, rather than being locked into one type of asset class in renewable energy. The result for investors has been impressive since the company went public…

Few companies have the ability to adapt and succeed in the current environment like Hannon Armstrong, and investors will be rewarded with not only a great stock but a 3.1% dividend yield as well.

2) Howard Smith recommends NextEra Energy (NYSE: NEE)

NextEra announced its [adjusted] third-quarter earnings per share (EPS) grew 11% compared to the previous-year period. The parent of electric utilities Florida Power & Light and Gulf Power continues to grow its renewable energy generation capacity for those businesses. But its NextEra Energy Resources business is experiencing the strongest growth, with EPS up 23%…

[NextEra’s] Energy Resources business is the world’s largest generator of solar and wind power, and has a growing battery storage segment…

NextEra… extended its earnings growth expectations of 6% to 8% off that higher base through 2023. The company also said it continues to expect a 10% annual dividend per share increase through 2022…

3) Jason Hall suggests Atlantica Sustainable Infrastructure (NASDAQ: AY)

The future of the world’s power supply is heavily tied to solar and wind, no matter who’s sitting in the Oval Office or roaming the halls of Congress. And few companies are as well-positioned to profit from this reality as Atlantica. The company owns, develops, and operates utility-scale wind and solar energy power plants, selling the power on long-term contracts. The result is steady, utility-like cash flows that it can use to fund new projects, and return to shareholders in a steadily growing dividend.

Atlantica is an international business, meaning that no matter what legislative action is taken in the U.S., its prospects remain very good…

At recent prices, Atlantica’s dividend yield is over 5.4%, and the prospects for regular dividend growth from here are very strong… Atlantica is a stock worth buying right now, no matter the outcome of U.S. election.”

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3. Best ESG Companies, Funds

Most ethical and sustainable investors are enamored with passive ETF index funds. However, some see a possible resurgence in actively managed funds too. One company that has brought to market an actively managed ESG fund is US fund manager Vanguard.

An article titled This ESG Fund From Vanguard Is Off to a Good Start describes this product. It’s written by David Kathman and appeared on the Morningstar.com site.

Here are some of Mr. Kathman’s thoughts concerning the fund.

Quote Vanguard Global ESG Select Stock (VEIGX) has shown promise so far, but it still has plenty to prove given its short track record. It earns a Morningstar Analyst Rating of Bronze for both its Investor and Admiral shares.

Vanguard launched this fund in June 2019 as the first actively managed environmental, social, and governance fund in its lineup… The fund has looked pretty good so far in its first 16 months of existence; its returns have beaten the world large-stock Morningstar Category average and the FTSE All-World Index benchmark, and it has earned a Morningstar Sustainability Rating of High (5 globes). Expenses are low, as one would expect of Vanguard, which remains a topnotch parent. All this is encouraging, but the fund will need to deliver over a longer time period to earn an Analyst Rating higher than Bronze…

The fund held up pretty well in the bear market from Feb. 19 to March 23, 2020, when its 30% loss was 2 percentage points less than the category norm and the benchmark.” End quotes.

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4. Best ESG Companies, Funds

In the UK, the FT Advisor just published an article titled Top 10 ESG funds named amid record year for inflows. Some of these funds might be of interest to non-UK residents as well. The article is by Imogen Tew.

Here are the funds with some brief quotes from the article.

Domestic UK

Royal London’s Sustainable Leaders fund was the top performing UK ethical fund over the past decade, almost tripling investors’ cash, according to AJ Bell.

Of ethical funds with a ten-year record, Premier Ethical and Liontrust Sustainable Future UK Growth also performed well, returning 174 and 152 per cent respectively. [Incidentally, go to this podcasts’ page for more of the top funds.]

Top 5 UK ethical funds 10 year total return (%)
Royal London Sustainable Leaders (GB00B7V23Z99.L) 195.9
Premier Ethical (0P00015BBW.L) 174.4
Liontrust Sustainable Future UK Growth (0P00000XCL.L) 152.6
Liontrust UK Ethical (0P0000XMUY.L) 150.8
BMO Responsible UK Equity (0P00000DLP.L) 111.2

Over the same time period, the FTSE All Share returned 64 per cent while the FTSE 4Good UK saw an average performance of 71 per cent.

Global

There have been some funds which have managed to outpace the racy MSCI World Index, however. The Liontrust Sustainable Future Global Growth fund tops the performance chart with a return of 267 per cent in 10 years. [Again, for more top-performing funds in this category go to this podcasts’ page.]

Top 5 Global ethical funds 10 year total return (%)
Liontrust Sustainable Future Global Growth (0P000023KC.L) 267.1
Janus Henderson Global Sustainable Equity (JEDTX) 262
BMO Responsible Global Equity (0P00000DLN.L) 240
Pictet Water (P3II.F) 212.4
BMO Sustainable Opportunities Global Equity (0P00017TVR.TO) 179.7

Mr. Laith Khalaf, a financial analyst at AJ Bell, said: ‘Given the extremely strong absolute performance of ethical funds in the global sector, it’s difficult to say investors should be disappointed but technically as a group they have underperformed.’” End quotes.

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End Comment

Well, these are my top news stories and their stock and fund tips — for this podcast: “Best ESG Companies, Funds. And More… ”

To get all the links, stock symbols, or to read the transcript of this podcast — and more — go to investingforthesoul.com/podcasts and scroll down to this episode.

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Stay well and healthy—and aware of the sustainable values of your investments!

Thank you for listening.

Talk to you again on November 20. Bye for now.

© 2020 Ron Robins, Investing for the Soul

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