Stockholm (NordSIP) – According to a report by Impact Investing, Sustainable Funds received US$26 billion of net inflows in the first quarter of 2019, following US$ 76 billion in net inflows for the whole of 2018. According to the report, new fund launches drove 40% of Sustainable Fund Flows.
Europe remains the centre of activity with More than 85% of the global responsible investment fund business come from Europe both through local products and cross-border UCITS, according to the report titled “ESG Innovations: The Rise Of Sustainable, Responsible, And Impact Investment Funds.” According to Impact Investing’s report, some of the main contributors to this trend were ABN AMRO Investment Solutions, Generali, and Länsförsäkringar, all of whom delegated newly introduced responsible investment funds to external managers.
“Responsible investments now exceed $1.3 trillion in assets through registered investment products such as US mutual funds, European UCITS, and exchange-traded funds (ETFs)”, says Jag Alexeyev, founder of Impactvesting LLC. “Their remarkable progress shines in contrast to net redemptions of US$0.3 trillion from all actively-managed funds worldwide last year. Responsible investment funds will attract at least US$0.5 trillion of new money during the next five years and serve as a beacon for active investment managers.”
Finland’s Ilmarinen – the country’s largest pension insurance company – seeded two ESG ETFs in the US market with DWS Xtrackers and BlackRock iShares. Each of the ETFs raised US$ 800 million each, leading Impact Investing to argue that the US market had reached a tipping point in 2019. Vanguard and Wellington seem to be following close behind. Still across the pond, Canadian Desjardins launched its SocieTerra range with advisory from Paris-based Comgest and Edinburgh-based Baillie Gifford as advisors.
In Japan, Daiwa SBI raised US$1.5 billion for an electric vehicle fund sub-advised by RobecoSAM, as well as additional capital for a new global impact portfolio managed by Wellington. Nomura focused on a Medical Impact strategy run by American Century, which received US$1.1 billion.
Emerging market sustainable funds, launched by BlackRock, KBC, L&G, Oppenheimer, Swisscanto, and Amundi remain amongst the best selling products.
“Investment managers recognise sustainability, ESG integration, shareholder engagement, and stewardship as essential to their future success”, said Alexeyev. “With a robust ESG approach, fund companies can unlock distribution potential, reduce risks for clients and for their own organisations, and align capital to promote better long-term outcomes for all stakeholders.”
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