Divestment outperforms conventional portfolios for the past 5 years

Divestment outperforms conventional portfolios for the past 5 years

The Independent Petroleum Association of America recently commissioned and funded a study, covered in The New York Times and elsewhere, which claimed that university endowments would suffer without fossil fuels in their portfolios. The Wall Street Journal ran an op-ed calling fossil fuel divestment a “Feel-Good Folly.”

Let’s look at the facts. The global indexing firm FTSE has developed several fossil fuel free indices, and has tracked performance over the past five years. Over this time period, FTSE’s North American fossil fuel free index has consistently outperformed the conventional benchmark index.

 

This five-year snapshot is not necessarily an indicator of future performance, but it is five years of real data demonstrating that a fossil-fuel strategy can make perfect financial sense. The fossil fuel free index also showed less volatility than the conventional benchmark, another factor that puts investors at ease.

Source: Business Spectator

Date: February 2015

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