Environmental, Social, and Governance (ESG) ETFs and ETPs listed globally broke through the USD100 billion AUM milestone at end of July 2020. The products gathered net inflows of USD6.76 billion during July, bringing year-to-date net inflows to a record USD38.78 billion which is significantly higher than the USD12.37 billion gathered at this point last year and the USD26.71 Billion gathered in all of 2019. Total assets invested in ESG ETFs and ETPs increased by 14.7 per cent from USD88 billion at the end of June 2020 to USD101 billion, according to ETFGI’s July 2020 ETF and ETP ESG industry landscape insights report, a monthly report which is part of a paid-for annual research subscription service.
“The S&P 500 gained 5.6 per cent in July, aided by the US Federal Reserve stimulus and strong earnings. International markets also gained, with Developed Ex-US and Emerging up 3.0 per cent and 8.5 per cent, respectively. In the developed markets Scandinavian countries benefited most, led by Norway (up 10.8 per cent) and Sweden (up 10.1 per cent); while Japan (down 2.0 per cent) was the sole negative performer among developed countries. Dollar weakness contributed toward the positive momentum in Emerging markets where 19 of 25 countries gained, led by Brazil (up 14.4 per cent) and Pakistan (up 13.4 per cent), while Taiwan (up 12.1 per cent) neared an all-time high.” According to Deborah Fuhr, managing partner, founder and owner of ETFGI.
Since the launch of the first ESG ETF/ETP in 2002, the iShares MSCI USA ESG Select ETF, the number and diversity of products have increased steadily. The Global ESG ETF/ETP industry had 393 ETFs/ETPs, with 1,077 listings, assets of USD101 Bn, from 92 providers on 31 exchanges in 25 countries.
Substantial inflows can be attributed to the top 20 ETFs/ETPs by net new assets, which collectively gathered USD4.04 billion at the end of July, Amundi MSCI Emerging ESG Leaders UCITS ETF DR – Acc (SADM GY) gathered USD588.82 million alone.
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.