Environmental, Social, and Governance (ESG) ETFs and ETPs listed globally gathered net inflows of USD679 million during December, according to ETFGI’s December 2018 ETF and ETP ESG industry landscape insights report, an annual paid-for research subscription service.
Total assets invested ESG ETFs and ETPs decreased by 3.20 per cent from USD23.22 billion at the end of November, to USD22.47 billion.
“The end of 2018 saw the trend in developed markets reverse, and although arguably predictable, the severity left many pundits scratching their heads. This end of year stress has widely been attributed to the disruption caused by trade disputes feeding into economic data, and the view policy makers are not going to be quite as accommodating as initially expected. The S&P 500 returned -9.03 per cent during December, and down -4.38 per cent for 2018. Developed markets ex-US fell -4.62 per cent during December, led by Japan and Canada, bringing the yearly return to -13.21 per cent. Relatively speaking, EM and FM fared the month better, returning -2.68 per cent and -3.15 per cent, finishing 2018 -13.53 per cent and -11.82 per cent, respectively” according to Deborah Fuhr, managing partner and founder of ETFGI.
At the end of December 2018, there were 208 ESG classified ETFs/ETPs, with 492 listings, assets of USD22.47 billion, from 61 providers listed on 26 exchanges in 23 countries. Following net inflows of USD679 million and market moves during the month, assets invested in ESG ETFs/ETPs listed globally decreased 3.20 per cent, from USD23.22 billion at the end of November 2018, to USD22.47 billion.
Since the launch of the first ESG ETF/ETP in 2002, the iShares MSCI USA ESG Select ETF, the number and diversity of products has increased steadily, with 208 ESG ETFs/ETPs listed globally at the end of 2018. 70 new ESG ETFs/ETPs have launched by 27 providers during 2018, with 4 during December alone.
Substantial inflows during December can be attributed to the top 20 ESG ETFs/ETPs by net new assets, which collectively gathered USD732 Mn during December. The iShares MSCI USA SRI UCITS ETF (SUAS LN) gathered USD158 Mn, the largest net inflow in December.
Confusion persists around what constitutes an ESG fund. According to PRI, a UN-supported initiative which seeks to understand the investment implications of ESG issues, 56 per cent of adopters believe there is a lack of clarity in ESG definitions. ETFGI’s classification system attempts to provide greater precision, with ETFs/ETPs listed globally organised into categories, including core ESG products and theme-based groups, such as Clean/Alternative Energies and Gender Diversity.