As if you needed anything to seal the deal about the fraudiness of green and socially conscious investments, Barron's has a report (free version here) about investors now fleeing wokester Environment, Social, Governance (ESG) investment funds, which bill themselves as "sustainable investments."

Investors yanked the most money out of U.S. sustainable funds in more than five years last quarter, withdrawing a net nearly $6.2 billion to round out a tough year for environmental, social, and governance strategies.

The net flow of money into U.S. sustainable mutual and exchange-traded funds has diminished steadily since it hit a record high in the first quarter of 2021, according to a new report from
Morningstar.

The decline comes as inflation, rising interest rates, and lingering fears of recession have weighed on markets and investor sentiment.

But that doesn’t explain the whole shift. The increasing politicization of ESG investing also hurt investment strategies that prioritize social and environmental issues, said Alyssa Stankiewicz, associate director of sustainability research at Morningstar and a co-author of the report.

 

The report claims that these groups don't make energy investments (nor apparently, utility investments based on charts such at the one at the last bar graph near bottom of the page here), meaning, they'd lost out on an opportunity to make a profit in energy sector companies which are doing well this year.

Barron's continues:

As for performance, sustainable funds lagged behind the broader market, given their lack of exposure to traditional energy stocks, the best-performing sector of the S&P 500 index with a gain of 66%. Communication services, consumer discretionary, and information technology lost 40%, 37%, and 28%, respectively. 

They went for tech and baubles, in other words, and rejected the fossil fuels that propel the economy. Seems they are happy to put gas in their cars, wear vegan leather derived from petroleum products, turn on their gas stoves, jet around on private jets, and flip the 'on' switch on to their computers, but they won't put a penny into all the dreadfully wicked and "morally wrong" energy and utility companies that make this modern lifestyle possible.

Hypocrite much?

Now they are eating crow. Their returns are down and investors are yanking money, big money. A valid investment opportunity in energy was just lying there for them to buy up at big profit this year, but out of the urge to virtue-signal, they left that money on the table and let someone else get it. And that's as if companies like ExxonMobil, ConocoPhillips and the rest of them weren't greenied-up themselves, continuously insising ad nauseum that they, too, are greenie-virtuous, shoveling large amounts of their own cash into greenie ventures and carbon credits.

A Bloomberg report that didn't age well last week in the Washington Post, titled "How to Understand the Correction in the ESG Fund Market" ridiculously claimed that investors were fleeing because the ESG companies weren't doing it right but that doesn't hold water now that these numbers are in and Barron's has scooped them.

For the first quarter in more than three years, U.S. sustainable funds had a lower organic growth rate than the total U.S. fund universe. The organic growth rate “puts the magnitude of fund flows into perspective,” said Stankiewicz. During the fourth quarter, sustainable funds shrank by 2.2% compared with an 0.8% shrinkage in the overall U.S. landscape.

The three U.S. ESG funds that attracted the most net inflows in the fourth quarter were American Century Sustainable Equity (ticker: AFDAX), Calvert Equity (CSIEX), and the iShares ESG U.S. Aggregate Bond ETF (EAGG). Two funds that saw steep outflows were the
iShares ESG Aware MSCI USA ETF (ESGU), which suffered $1.8 billion in net outflows, and Parnassus Core Equity (PRBLX), at $1.2 billion.

Now the ESG investors get less. It's not for nothing that Florida's Gov. Ron DeSantis put the kibbosh on ESG funds for Florida's public pensions (and curiously, didn't get signficant pushback from pensionholders the way he did for banning a wokester college course). DeSantis protected Florida's pensioners from the kinds of funds investors are already fleeing on their own.

Bottom line here is ... the bottom line. They could have gotten 'more' by investing responsibly, which is to say, with a focus on returns, but they instead chose to have less, so they could virtue-signal, and meddle with corporate management at the shareholder protest level, as this fund brags about doing in its "2022 Stewardship Report" here, which is full of greenie gobbledygook.

Even greenie investors, of course, could have taken that 'more' in returns instead and put that profit into new greenie ventures of their own choosing but that train has left the station. None of these characters seems to understand that that is how investing works. They made less instead of more by failing to put money into legitimate investments on political correctness grounds and are now surprised to see that investors taking their money some place else.

Image: PxHere // CC0 public domain