What's going on?

Fresh analysis out this week showed that mutual funds had a strong start to 2021, as pooled investments became the closest investors were getting to a vacation.

What does this mean?

Mutual funds collect money from lots of small investors, and most of them then �actively� invest that cash � i.e. pick and choose where to invest, rather than passively track a market. And it turns out they performed well in the first two quarters of the year, according to Goldman Sachs� analysis of almost 600 funds with $3 trillion of cash between them.

The funds that did best began the year by betting on cheap-looking �value� stocks and smaller companies, and added more big, reliable companies � think Amazon and Apple � in the second quarter. But they�ve all been doing well: 43% of mutual funds focused on large stocks, for example, were up by more than the �benchmark� indexes they�re charged with outperforming � and they outstripped the long-term average of 33% too.

Why should I care?

For markets: A big win for ESG.

Investors have been putting a lot of money into mutual funds focusing on environmental, social, and governance (ESG) factors � $314 billion worth, to be precise. That huge influx has helped double the amount of money those ESG-focused funds have been holding in the last year, bringing the global total to around $1.6 trillion. The US is lagging behind, mind you: only 3% of the money in American funds is in ESG-focused funds, compared to 9% internationally.

For you personally: Some ideas to pinch.�

Take a closer look at which stocks are most and least popular with mutual funds, and you might get a few ideas about where you should and shouldn�t put your own money. They�re confident in the payments space, backing companies like Visa, Mastercard, and Square. But they�re not so keen on pharma and biotech companies, like Johnson & Johnson, Pfizer, and Amgen.