New record set for ESG ETFs

Money continues to flow into dedicated ESG passive products

A record $52.3bn of assets were invested in ESG exchange-traded funds (ETFs) and exchange-traded products (ETPs) at the end of November 2019, data from research and consultancy firm ETFGI reveals.

This represents an increase of 7.4% from $48.7bn at the end of October.

Europe leads the way, with 118 ESG products and 54% of the assets, the data shows.

Since the launch of the first ESG ETF/ETP in 2002, the number and diversity of products has increased steadily, with 269 ESG ETFs and ETPs listed globally at the end of November 2019 – with 753 listings from 71 providers in 58 countries.

The record month saw global listed ETFs and ETPs gather net inflows of $2.6bn and seven new ESG ETFs and ETPs launched.

The market has grown substantially from 2018, when there were 206 ETFs and ETPs with total assets of $22bn, according to ETFGI.

The firm said the significant inflows last year can be attributed to the top 20 ETFs and ETPs by net new assets, which collectively gathered $1.48 bn in November – with JPMorgan’s ESG Ucits ETF accounting for $201.25m alone.

However, the research company warned that confusion persists around what constitutes an ESG fund.

“According to the UN-backed Principles for Responsible Investment, 56% of adopters believe there is a lack of clarity in ESG definitions,” the firm said.

“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,” ETFGI added.