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.

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.