A recent working paper published by the European Securities and Markets Authority (ESMA) has found that EU ESG active UCITS “tended to perform better” than non-ESG active UCITS during the 10 weeks of the first Covid outbreak. In addition, ESMA claimed that the paper presented a first attempt to “address the heterogeneity within the cohort of active funds”, showing some active funds significantly outperforming others.

The paper analysed the performance of EU ESG funds from 19 February 2020 to the end of June 2020, a period which it described as “characterised by a strong market downturn followed by a fast recovery of equity prices and a stabilisation at elevated levels”. It used data on 2,581 equity active UCITS domiciled in the EU from Morningstar Direct.

Within ESG funds, those with a high ESG rating reported higher returns during the period of study compared to funds with a low ESG rating. The results potentially suggested that “investors perceive sustainability as providing hedge in troubled times”.


The paper concluded that “further investigation is warranted, aiming at more robust results and at a more in-depth analysis of the drivers behind investor choices and observed outcomes”. This could include a more in-depth analysis that takes into account fund risk exposure, which could be a relevant factor in explaining performance dynamics, and which was not fully accounted for in the current analysis.