Sara's Scoop

Research evidence excerpt

Sara's Scoop

What Sustainable Funds Were Buying & Selling In 1Q26

About This Report: In this report, we have updated our analysis of actively managed sustainable equity fund holdings for 1Q26. In particular, we

examine which US, European & Canadian names have been most popular in these funds (ESG Darlings), which names have been least popular (ESG

Underweights), as well as which names have seen rising and falling ownership recently. All of the analysis in this report is based on trends within our

scrubbed universe of actively managed sustainable fund products.

Key Takeaways From Our Analysis: (1) Sustainable funds are seeing mixed performance drivers recently with both ESG Darlings and ESG

Underweights outperforming in June. (2) Sustainable funds continue to buy names enabling more sustainable and resilient AI infrastructure. From a

thematic perspective, exposure to the Grid, Nuclear Power, and Digital Security themes hit new highs in 1Q26. Exposure to the Clean Energy theme

was also approaching 2021 highs at the end of 1Q26. (3) Sustainable funds were reducing exposure to Water and Pollution & Waste themes (both

defensive / higher quality themes) in 1Q26. While ownership levels are still elevated vs. history, the themes look less crowded than what we were

seeing last year.

Updates To Our ESG Darlings List & Recent Performance Trends

‒ US Large Cap ESG Darlings Have Outperformed In June: Slide 6 has the latest list of S&P 500 ESG Darlings – these are names that are

overweight positions in sustainable funds (relative to what we see in conventional long only funds). When flows were accelerating into

sustainable funds, these names benefitted the most. We now view this list as a way to gauge crowding risks in the sustainability space. This