Downturn in ESG funds may reverse in the next few quarters: MSCI CEO

THE underperformance of environmental, social and governance (ESG) funds may gradually turn in the next few quarters, said MSCI chief executive officer Henry Fernandez.

This is because technology companies, which tend to feature quite prominently in ESG funds, are beginning to outperform energy stocks as oil prices come down. Asset managers in the European Union (EU) are also expected to start launching ESG products at the same pace prior to the slowdown, an activity that has taken a backseat as ESG funds in the region are being reclassified as a result of greater regulatory scrutiny.

“So I think that in the next few months – maybe a few quarters – the trend may reverse,” Fernandez told The Business Times in an exclusive interview.