So-called ESG equity strategies—buying the stocks of companies that perform well on environmental, social-responsibility and governance (ESG) metrics—can help you align your portfolio with your ethical values. But can they also help you ride out a down market, or even a bear market, with fewer losses? It seems 2019 may be the year that investors find out.
After a rough autumn during which the benchmark S&P 500 index has shed nearly 10% of its value, many commentators are predicting sluggish returns at best for next year. Trade tensions between the U.S. and China are one troubling factor; the likelihood of rising interest rates and a slowdown in corporate earnings growth are others.But research does suggest that companies with strong ESG ratings may hold up better in a down market. And that could give investors a sense of security if 2019 turns out to be the year that the bull market party ends.