Renewables or fossil fuels? Lessons from the 2022 fund performance scoreboards

By Trey Thoelcke Updated Jan 5, 10:30AM EST · Published Jan 5, 4:27AM EST

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Renewables or fossil fuels? Lessons from the 2022 fund performance scoreboards — © PhilAugustavo / iStock via Getty Images

(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)

CHAPEL HILL, N.C. (Callaway Climate Insights) — 2022 was the second year in a row in which the average fossil fuel fund significantly outperformed the average green energy fund.

It wasn’t even close: The average fund in Morningstar’s renewable energy and sustainable investing categories lost 21.9% last year, versus a gain of 50.7% for the fossil fuel funds in Morningstar’s energy category. This spread of over 70 percentage points was even wider than the greater-than-40-percentage-point advantage in 2021 that fossil fuel funds had over green energy funds.

To be sure, green energy funds had their day in the sun in 2020, when the situation was just the reverse of what it was in 2021 and 2022. That was when the average green energy fund beat the average fossil fuel fund by more than 140 percentage points.

Believe it or not, these three years of gains and losses net out to a virtual tie: The average green energy fund has produced a 14.29% annualized three-year return through the end of 2022, versus 14.28% for the average fossil fuel fund. (Note that I calculated these averages based on those funds and ETFs that existed for the entire three-year period.)

I draw several investment lessons from these results:…

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About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.