Former Connecticut State Treasurer and founder and president of the Institute for Pension Fund Integrity Christopher Bancroft Burnham recently cited Dr. Wayne Winegarden’s study showing how environmental, social, and governance (ESG) funds underperform broader investment funds over the long-term in an op-ed published in Barron’s.
BlackRock’s ESG Strategy Plays Politics with Public Pensions
By Christopher Bancroft Burnham
In a relatively short time, BlackRock has become the largest asset manager in the world. The firm built its impressive franchise as a low-fee, efficient provider of index portfolios. Now, however, Larry Fink, the mortgage-bond trader who founded the firm in 1988 and has been CEO ever since, wants to take BlackRock in a different direction. Why? And what does the shift mean for clients, especially pension funds?
. . . Research has consistently indicated that conventional index portfolios perform better than ESG portfolios, partly because ESG portfolios charge higher fees. A Pacific Research Institute study last year, for example, found that for 18 public ESG funds with a 10-year track record, “a $10,000 ESG portfolio would be 43.9% smaller compared to an investment in a broader, S&P 500 index fund.” Only two of the ESG funds would have beat the S&P fund over a 10-year period.