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Sustainable Investment Funds Performance Scorecard: December 2019

Summary Stock and bond markets worldwide delivered excellent returns in 2019. In December, markets favored stocks that posted above average monthly results while bond returns continued to decelerate. Encouraging news that the US China Phase 1 trade agreement will be signed on January 15 signaled a significant de-escalation of trade tensions between the two nations…

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Summary
Stock and bond markets worldwide delivered excellent returns in 2019. In December, markets favored stocks that posted above average monthly results while bond returns continued to decelerate. Encouraging news that the US China Phase 1 trade agreement will be signed on January 15 signaled a significant de-escalation of trade tensions between the two nations that have affected markets throughout the year both positively and negatively. This factor, combined with interest rate cuts, Fed liquidity, easing anxiety regarding the strength of the US economy and prospects that the longest expansion in US history will continue, moved markets higher in December notwithstanding continuing geopolitical and domestic political uncertainties linked to the President’s impeachment proceedings. The S&P 500 posted a total return gain of 3.0%, while the Dow Jones Industrial Average and Nasdaq Composite recorded 1.9% and 3.6% increases. Outside the US, developed and emerging market equities achieved even stronger returns, with the MSCI ACWI ex USA gaining 4.4% and emerging markets climbing 7.5%. Across other asset classes, investment-grade bonds dropped -0.1%, longer-dated bonds gave up almost 3.0%, while gold and energy in that order recorded increases of 3.6% and 6.9%. Within the energy sector, natural gas was the only commodity to fall back, giving up -3.0%.

The average performance of long-term sustainable funds in December, regardless of asset class or sector, a total of 3,313 funds/share classes, was 2.36%. International funds gained an average 4.11%, followed by US equity and specialty funds, up 2.70% on average and bond funds, taxable and municipals combined, added 0.77%.

Funds integrating ESG factors, including some funds offered by firms that equivocate on this point, dominated the roster of 60 top and bottom performing funds in December. But there were also variations within the three fund segments, most notably across the top performing US equity and sector funds that were dominated by thematic funds focused on the alternative energy sector. A total of 16 funds that ranked within the top 10/bottom 10 funds pursue thematic investing approaches.

US Equity and Sector Equity Funds/Share Classes: Average +2.70% in December

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