THE rIGHT IS THE lEFT:

Imagine a large fund family, containing 407 funds (a great many, but Fidelity has even more). Over the trailing five years, the average return for that company's U.S. equity funds, which control most of the organization's assets, has exceeded that from three of the five largest providers: Vanguard, BlackRock BLK, and American Funds.

Not bad, right? What's more, the numbers look similar when the company is compared against the entire fund industry. Its funds slightly lag the three-year average but are ahead over the five- and 10-year periods, as well as over the most recent year. (This and all other computations include both traditional mutual funds and exchange-traded funds.)

A bar chart showing the annualized total return for two groups of U.S. equity funds, over various time periods: 1) ESG funds, and 2) non-ESG funds.

Perhaps that presentation exaggerates the organization's accomplishments. If its funds have performed poorly relative to others in the same category but have benefited by occupying the most profitable categories, they could look good despite themselves. We can test that possibility by evaluating the flagship Morningstar Category of large-blend funds.

The apples-to-apples pattern is virtually identical.

Yes, despite these thoroughly unobjectionable results, the company faces what no other fund organization has ever encountered: Congressional opposition. This month, House Financial Services Committee member Andy Barr (R-KY) reintroduced the Ensuring Sound Guidance Act, which would effectively prevent the company's funds from being used within 401(k) accounts. They have been deemed uniquely unsuitable. Every fund competitor may proceed as usual, but not this organization.

My hypothetical "fund company," as you may have already guessed by the proposal's abbreviation, consists of the industry's environmental, social, and governance focused funds. Their results are depicted above, and their retirement-plan futures are now threatened.

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