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'Green' funds could be hit hard by the short-squeeze, Bank of America says - CNBC

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A woman is reflected in a puddle as she passes a Bank of America branch in New York's Times Square.
Brendan McDermid | Reuters

Bank of America has warned that so-called ESG funds could be impacted by the wild trading in markets, and listed the stocks it says are most at risk.

Shares of several stocks including GameStop surged in January as retail investors piled in, while hedge funds with short positions on those stocks made heavy losses. This is known as a short squeeze.

In a recent research note, Bank of America's analysts said they are concerned that "ESG darlings" might be affected by "the next leg" of this trend. ESG funds are investment portfolios made up of stocks that rate highly on environmental, social and governance factors. Investors put "significant inflows" — $255 billion globally — into such funds in 2020, according to Bank of America.

The bank's analysts, led by Savita Subramanian, identified the stocks at risk, naming those most popular with ESG funds.

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February 04, 2021 at 04:39PM
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'Green' funds could be hit hard by the short-squeeze, Bank of America says - CNBC
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