The 2020 Refinitiv Lipper Fund Awards stand out as the latest evidence that investors aren’t giving up performance when supporting investments based on environmental, social and governance criteria.
Exhibit A is Calvert Research and Management. The $22 billion asset management firm that has long been associated with sustainable investing strategies is the overall winner in the small-company category.
“This is one of a number of occurrences that verify the fact that environmental impact and social impact really matter to companies’ financial outcomes, and that investors benefit from companies knowing the ESG policies’ impact on their own bottom line,” said John Streur, Calvert’s president and chief executive officer.
This is the first time Calvert received the annual award, which, like all the Lipper awards, is based on risk-adjusted performance over the past three-, five- and 10-year periods.
“We are very purposeful in our ESG research to focus on financial materiality,” Mr. Streur said. “We understand in order to do this in a way that works for investors we have to produce the kind of results that Lipper recognizes.”
While seeing an ESG-focused firm like Calvert earn the high honor of overall company winner is an endorsement of ESG investing, the winner of the overall large-company category might be an even stronger endorsement for ESG analysis and research factors.
MFS Investment Management, the nation’s oldest mutual fund company and managing $528 billion, doesn’t have a single fund labeled ESG, but for the past two years it’s been rated as the highest ESG-friendly shop, based on a globe rating system at Morningstar.
“We don’t think you have to forego returns for ESG strategies,” said MFS chief executive Mike Roberge, who said the asset manager is moving past the labels to apply ESG analysis as part of its broader investment research.
MFS also is the overall winner in the large company category, an accolade it hasn’t received since 2011 coming out of the financial crisis, which Mr. Roberge described as an ideal time for active managers to prove their worth.
“As the industry has been challenged by the move to passive investing, it’s clearly more challenging than it was 10 years ago if you just look at industry flows,” he said. “We didn’t need to remake ourselves, we just needed to stay true to what we are.”
MFS also won the large company equity award this year. WCM Investment Management won the small company equity award.
While Lipper recognizes 324 individual fund winners and eight fund family awards, the unintentional ESG theme was not lost on Robert Jenkins, head of research at Lipper, Refinitiv.
“For the fund company awards, we’re looking at the mix for good returns across the product pallet, and companies are rewarded for having less-volatile returns because less volatile funds tend to be the ones retail investor stick to,” he said. “I’m particularly excited about Calvert because they’ve been doing ESG since the 1970s before it was cool, and the ESG space suffers a bit from the myth that you have to take a hit on performance.”
As in past years, companies with a large number of funds won the most individual fund awards. Fidelity Investments, The Vanguard Group and Pimco represented the biggest winners of the night, combining for more than two dozen individual fund awards.
“The reason Fidelity exists hasn’t changed since our founding in 1946: To strengthen and secure our clients’ financial well-being,” said Bart Grenier, Fidelity’s head of asset management.
“Delivering strong, consistent long-term performance for our fund shareholders is core to that mission and we’re honored that the commitment and hard work of our investment professionals have been recognized by Lipper,” he said.
Even though the trophies are awarded based on risk-adjusted performance over three different multiyear periods, Mr. Jenkins of Lipper admitted the 20% market correction at the end of 2018 set the table for strong returns by actively managed funds in 2019.
“Last year active managers benefited from the trough in the fourth quarter of 2018,” he said. “And right now, it’s looking at the exact same thing. Active managers that might have taken some cash off the table are smiling now.”
In the fixed-income and mixed assets categories, including target-date funds, Nuveen Fund Advisors and its parent company TIAA were the big winners this year.
Nuveen was acquired by TIAA in 2014, but last year was its first full year operating with complete integration of the combined $1.1 trillion TIAA platform.
Nuveen won the large-company award for fixed income, and the fund family still branded as TIAA won the large-company mixed assets trophy for an unprecedented fifth straight year.
“When you combine the two organizations, it’s a perfect complement from fixed income standpoint,” said Bill Huffman, Nuveen’s head of equities and fixed income.
“It’s the proof point that we can manage across a broad, diverse number of asset classes and drive competitive performance over a long period of time that really sets us apart,” he added. “Whenever you have very volatile markets, active management can show its true colors and if you’re doing it well you’re going to win awards like this.”
Diamond Hill Capital Management won the small-company award for fixed income, and Astor Investment Management won the small-company mixed assets award.
“It’s meaningful for a smaller shop like ours to get this recognition,” said Rob Stein, founder and chief executive of Astor, which manages $2.7 billion across three funds.
A first-time Lipper award winner, the 17-year-old firm also won an individual fund trophy for Astor Macro Alternative (GBLMX).
“For whatever reason, the broker-dealers and wirehouses like us, and we’ve always been able to get on platforms,” Mr. Stein said. “It’s a combo of performance and service, and the value you’re adding to the client.”