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Lauren Juliff and Henrik Wold Nilsen
White Papers 2 min read time

'Magnificent' Performance - A Review of Climate Index Strategies

Par Lauren Juliff, Head of UK Institutional, Climate & Sustainability Product Lead et Henrik Wold Nilsen, Senior Portfolio Manager
30. septembre 2025

Analysis of the top overweight positions of climate index tracking funds relative to the market cap weighted index shows that almost all of them have relatively large overweights in the 'Magnificent Seven', representing meaningful stock specific risk.

As the strapline for the 1960 Yul Brynner Western (almost) goes: “They were seven ... THEY PERFORMED LIKE SEVEN HUNDRED”. Global stock markets have been dominated this year by just seven US tech companies. "The Magnificent Seven", Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia and Tesla, have been responsible for “all of the gains in global stocks” throughout 2023 so far, due to investor projections about the prospects for Artificial Intelligence.

This is a much-reported topic, but this "Magnificent Seven" phenomenon has an important but so far under-reported consequence that we think is worth investor attention. We find a positive relationship between the performance of climate index funds and their positions in the Magnificent 7 stocks throughout 2023 and question whether this is aligned with the objectives of investors seeking "passive" global equity replacement strategies or exposure to the climate transition opportunity.

Read the white paper here:

The Magnificent Performance of Climate Index Tracking Strategies.pdf

Date: 30/09/25
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