Where will the ESG money go next?

Latest results from Bonhill Intelligence's fund buyer research

ESG fund buyers in the UK have indicated increased appetite for impact funds and portfolios aligned with the UN’s Sustainable Development Goals (SDGs) in research carried out by Bonhill Intelligence, a sister department to ESG Clarity.

In a survey of carried out in Q4 2021 and compiled in the Competing in an ESG World report, UK and European fund selectors said they had progressed their ESG integration with almost 90% in the UK saying they had finished creating ESG product ranges and services. In Europe, it was two-thirds who said their ESG solutions were completed.

However, only 34% in the UK said they have completed integrating ESG across the business or are in the process, whereas in continental Europe 100% said they were integrating ESG – two-thirds have already done it, one third are in the process.

Bonhill Intelligence also asked respondents about where new client money would be heading.

For the UK, there was a clear bias towards impact funds with 61% saying they will increase or increase strongly exposure to funds looking to make a positive impact on the environment and/or society. No respondents indicated they would reduce allocations to this area, but 18% said they currently have zero exposure.

Over 50% also indicated an increase or strong increase to funds aligned with SDGs – an area which has seen a number of fund launches over the past year.

Active ESG solutions, ESG-themed funds, and ESG-compliant core bond funds were also mentioned as areas of interest.

Meanwhile in Europe, ESG-compliant core equity funds topped the list of where fund buyers expect to increase allocations over the next 12 months, with 66% pointing to this asset class.

Funds aligned with SDGs were also popular on the continent, followed by ESG-themed funds, active ESG solutions and, again, ESG-compliant core bond funds.

For both regions, funds in the ESG alternatives space can also expect to see an uplift in flows with fund buyers indicating increasing exposure in this area.

Bonhill Intelligence’s Competing in an ESG World 2022 Edition for UK & Europe contains all the information fund managers need to know about what fund buyers want when it comes to responsible investing. The report covers insights into the usefulness of ESG ratings, ESG education and integration, fund buyer preferences, what is pushing the ESG agenda, how fund selectors are choosing funds for portfolios and the renowned ESG Clarity Brand Index, which ranks the top asset managers for ESG according to fund buyer preferences. To purchase your copy please get in touch with sarah.stewart@bonhillplc.com


Natalie Kenway

Natalie is editor in chief at MA Financial covering ESG Clarity, Portfolio Adviser and International Adviser. She was previously global head of ESG insight for ESG Clarity and has been an investment journalist...