OWLshares continues rolling out the case studies that convinced us of ESG’s potential to improve our investments. We’ll be releasing these on the blog here every week. We’ll also present additional studies and analysis in our newsletter — take a second to sign up to get this additional valuable information.

Chart: Top 1000 US Companies ESG Filtered & Market Cap-Weighted vs Unfiltered & Market Cap-Weighted

This week we use the same starting universe as our first two studies: the top 1000 US companies. The control portfolio, shown by the red line, is simply market cap-weighted. The blue line represents a portfolio which first filters companies below the median ESG score, then weights by market cap.

The ESG-filtered portfolio tracks the control portfolio fairly closely for the first four years, just slightly underperforming. After a mid-2013 dip, the test portfolio leapfrogs atop the control by early 2014, where it remains with a very slow trend toward outperformance.

Disclosure: March 31, 2009 is the first date that the OWL ESG historical database begins. The top 1000 US companies are not all covered in the OWL ESG database. Any companies not covered received a weight of 0.00% and their performance is not reflected in the OWL ESG-weighted simulated portfolio. Both portfolios for which the performance is displayed are simulated portfolios; they are non-investible models; there are no investible products tracking them; performance is based on simulated backtests. Factor exposures other than ESG score, such as market capitalization, valuation ratios, and momentum have an effect on performance as well. Past performance is in no way indicative of future results.

The information contained herein (the “Information”) is for illustration and discussion purposes only. It is not, and may not be relied on as, investment advice or as an offer to sell or a solicitation of an offer to buy any security. The Information is not sufficient to form a basis for deciding to make any investment. There can be no assurance and no representation, express or implied, that the Information is accurate. The Information is provided as of the date indicated, is not complete, is subject to change, and no obligation is undertaken to revise or update it.