There are several differences between the UK equity funds allocators use in ESG portfolios versus non-ESG portfolios.
The one which jumps out first is that fewer funds are held at all: 23 compared to the 88 in normal growth portfolios.
The other distinction is that Royal London is the asset manager which comes out on top, largely due to the success of its Royal London Sustainable Leaders fund which is the single most popular UK equity fund in our ESG database. It is followed shortly after by Columbia Threadneedle which runs the popular CT Responsible UK Equity fund.
The relative success of Royal London and Columbia Threadneedle might make you think the active/passive split in ESG portfolios was more in favour of active compared to non-ESG growth portfolios but the split is actually almost identical, with just shy of 17 per cent of fund holdings going passive.
Funds run by UBS and L&G do well here, with UBS MSCI UK IMI Socially Responsible ETF the most popular option.
The passive funds which are used are concentrated in the equity growth fund sector - with no passive UK equity income funds used.
One distinction that does jump out is that when it comes to UK equity ESG portfolios, portfolio managers tend to use bigger fund managers with relatively few boutique funds being held.
This may be a function of the relative newness of the asset class, boutiques tend to be built by individuals with very long track records and high industry profiles.
In fact more than 30 per cent of the fund holdings are in funds run by houses which manage £500bn or more. When that threshold is taken down to £100bn, the proportion is 70 per cent.
As far as the style of these funds, readers will be unsurprised to hear that the UK equity funds being chosen have a much greater growth style tilt than in non-ESG portfolios, where portfolio managers will be using UK exposure to gain access to the value style.
However the funds chosen are not out-and-out growth in style. In fact the most common style is the one which Morningstar brands "mix".
So how successful have these funds proven to be? In truth the funds picked here have been much more likely to underperform than their non-ESG counterparts but this is likely to be attributable to the wider struggles for performance in the ESG sector.
Not a single UK equity fund in our ESG database achieved first quartile performance over the past three years.
In terms of cost, the funds chosen by ESG portfolio managers are less likely than those in non-ESG funds to fall at the top end of the pricing range, with only 6 per cent of funds charging an OCF of between 0.9 and 1.2 per cent and no funds charging 1.2 per cent or more (one UK equity fund in our non-ESG database charges more than 1.2 per cent).
But as with most of the sector there is a clustering between 0.6 and 0.9 per cent with more than 80 per cent of the UK equity funds in our ESG database falling into this category.
As before, of course, these OCFs are the ones made available on the fund's main class and allocators may well have secured cheaper deals.
