Sustainable Bottom Line: The best performing sustainable fund investment categories in September 2025 and trailing 12-months also corresponded to categories with the highest risk profiles.
Notes of Explanation: Returns reflect the average performance of investment categories applicable to focused long-term sustainable mutual funds and ETFs. # Funds represents number of funds, including share classes in the case of mutual funds, in the corresponding investment category. Monthly standard deviation of returns calculated over a three-year time interval. Sources: Morningstar and Sustainable Research and Analysis LLC.
Observations:
• The best performing focused sustainable fund investment categories in September 2025 and the trailing twelve months, based on average performance results, also corresponded to categories with the highest risk profiles, based on standard deviations of monthly returns. The focused sustainable funds universe is classified into 74 long-term investment fund categories (i.e. excluding money market funds) that cover mutual funds and ETFs, according to Morningstar.
• The top ten performing categories posted average gains of 8.9%, 28.9% and 21.7% in September, year-to-date and over the trailing twelve months. The same top ten performing categories, some of which consist of as few as one fund, are also the riskiest, displaying a high average monthly standard deviation of 8.9%, ranging from a low of 6.4% to an outlier high of 25.7% due to use of leverage. Even when the outlier is excluded, the average standard deviation is still a high of 7.1%. The remaining 64 long-term fund categories posted an average gain of 1.9%, 10.41% and 7.1% in September, year-to-date and over the trailing 12 months. This larger group of investment fund categories display an average standard deviation of just 3.2%.
• Trading-Leveraged Equity is the best performing investment category in September, up 25.8%, however, it is comprised of just one fund—the leveraged small $5.7 million Direxion Daily Electric and Autonomous Electric Vehicles Bull 2X ETF (EVAV). The fund, which posted a trailing twelve-month gain of 62.53%, is also the riskiest among the entire universe of focused sustainable mutual funds and ETFs with a standard deviation of 25.7%. The next two categories, also consist of one fund each, were up 9.7% and 8.5% in September.
• EVAV which is considered a clean energy fund, was one of the top ten performing focused sustainable funds in September—a cohort of clean energy funds that turned in the best performance in September but are also exposed to the highest risks based on their standard deviations of returns. Three macro tailwinds drove the results achieved by the 10 best performing sustainable funds in September, including (i) the broad September equity rally, (ii) falling rate expectations after the Fed’s mid-September move, supportive for long-duration growth themes, and (iii) a powerful narrative shift around clean-power reliability for AI data centers that turbo-charged hydrogen/fuel-cell names and several clean-tech sub-themes. Refer to Top performing funds in September 2025 https://sustainablest.wpengine.com/chart-of-the-week-october-13-2025-top-performing-funds-september-2025/.
• In September 2025, equity markets extended earlier gains, with the S&P 500 up 3.65% and technology/mega-cap names powering much of the advance. Looking ahead, the durability of earnings growth, the Fed’s next moves, inflation dynamics, and global macro risks (e.g. China, Europe) will likely shape returns. Caution is warranted amid elevated valuations and potential volatility (already observed in so far in October) that is more likely to whipsaw funds with higher risk profiles.
