Who is the top streamer? Nvidia is more popular than Tesla! ESG funds are also bullish.
Against the backdrop of severe losses in ESG funds, many ESG funds have begun to adjust their positions this year, heavily investing in AI-related stocks. Although NVIDIA is not related to issues such as climate change, it does not prevent it from becoming the darling of ESG investment.
Under the hype of AI, leading technology stocks have been highly sought after. Nvidia, which has recently joined the "trillion-dollar club," has exploded unprecedentedly. Many institutional investors who missed the opportunity have been rushing to buy high in recent weeks, including many ESG funds.
Bloomberg data shows that there are now more than 1,400 ESG funds directly holding Nvidia shares, and another 500 ESG funds indirectly holding them. As of 2023, Nvidia has accumulated a total increase of about 200%.
ESG funds refer to funds that incorporate environmental protection, social responsibility, and corporate governance factors into investment decisions. Typically, these funds invest in targets that are concentrated in the green energy sector, such as Tesla, Vestas Wind Systems, etc., which are stocks that ESG investors have long been fond of.
As a gold digger in the AI boom, although Nvidia is difficult to relate to issues such as climate change, this does not prevent it from becoming the darling of ESG investment. In the eyes of some ESG institutional investors, Nvidia has "high-level ESG disclosure" and "earth-friendly products."
Choosing non-green targets like Nvidia, which are controversial, is also a helpless move for ESG funds.
In 2022, most ESG funds suffered serious losses, with the top 10 ESG funds with the largest assets under management all experiencing double-digit losses, of which 8 underperformed the S&P 500's decline of 14.8%, and the issuance of corporate ESG bonds decreased by nearly 1/4.
Morningstar data shows that in 2022, US ESG funds, including stocks, bonds, and other asset categories, attracted a total of $3.1 billion in new capital, lower than the $69.2 billion in 2021.
Against this background, many ESG funds have begun to adjust their positions this year, heavily investing in technology, especially AI-related individual stocks. The top-ranked ESG funds have all become AI enthusiasts, and their returns have also changed from last year's poor performance, with most top funds exceeding 40%. In Europe, ESG equity funds have benefited an average of about 12% this year, exceeding the 8% return of the Euro Stoxx 600 index.
Bloomberg data shows that the highest-performing ESG fund this year comes from the US-based PIMCO Group. Its top four holdings are Apple, TSMC, Microsoft, and Nvidia. Since the end of December, the fund's returns have beaten 97% of its peers.