What’s Going On Here?Fresh analysis out this week showed that mutual funds had a strong start to 2021, as pooled investments became the closest investors were getting to a vacation. What Does This Mean?Mutual funds collect money from lots of small investors, and most of them then “actively” invest that cash – i.e. pick and choose where to invest, rather than passively track a market. And it turns out they performed well in the first two quarters of the year, according to Goldman Sachs’ analysis of almost 600 funds with $3 trillion of cash between them.
The funds that did best began the year by betting on cheap-looking “value” stocks and smaller companies, and added more big, reliable companies – think Amazon and Apple – in the second quarter. But they’ve all been doing well: 43% of mutual funds focused on large stocks, for example, were up by more than the “benchmark” indexes they’re charged with outperforming – and they outstripped the long-term average of 33% too. Why Should I Care?For markets: A big win for ESG.
Investors have been putting a lot of money into mutual funds focusing on environmental, social, and governance (ESG) factors – $314 billion worth, to be precise. That huge influx has helped double the amount of money those ESG-focused funds have been holding in the last year, bringing the global total to around $1.6 trillion. The US is lagging behind, mind you: only 3% of the money in American funds is in ESG-focused funds, compared to 9% internationally.
For you personally: Some ideas to pinch.
Take a closer look at which stocks are most and least popular with mutual funds, and you might get a few ideas about where you should and shouldn’t put your own money. They’re confident in the payments space, backing companies like Visa, Mastercard, and Square. But they’re not so keen on pharma and biotech companies, like Johnson & Johnson, Pfizer, and Amgen. | 
