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March 3, 2022

Lipper Responsible Investing Attributes: Negative Screening Funds Draw Largest Flows Over Trailing 12 Months

by Jack Fischer.

Just this year Refinitiv Lipper has rolled out new Responsible Investment (RI) attributes. These new fund-level attributes have been introduced to meet the modern responsible investing landscape at the global level.

In Lipper’s database, these attributes act as flags that identify funds that construct their portfolios in accordance with strict RIA criteria. Lipper will designate a fund with a “Responsible Investing” flag if fund documentation gives clear and precise commitments that Responsible Investment factors are not just considered, but acted on as part of the funds’ core investment process.

The “Responsible Investments” attribute is the general identifier to flag any funds that include ESG, SRI, Positive/Negative Screening, and/or Impact Investing as criteria in their investment philosophy. The attribute will be assigned to any fund that meets at least one of those criteria. In total, 19 sub-attributes reflect the various strategies a fund takes in the context of sustainable investment approaches.

To help visualize this, I’ve compiled trailing one- and three-year flows (as of January 31, 2022) for all fixed income and equity U.S. domiciled funds. Please note these fields are not mutually exclusive. For example, funds given an “SRI” flag often, but not always, practice negative screening. If this is the case the fund will be given the “Responsible Investing” general flag, “SRI” flag, and relevant negative screening flag.

Since January 2021, both equity (+$55.8 billion) and fixed income (+$15.1 billion) funds that have received the “Responsible Investing” attribute have attracted new capital. Over the trailing three-year period RI equity funds pulled in $126.3 billion and RI fixed income funds observed $25.3 billion in inflows.

Under the RI attribute, the majority of flows have been directed at funds that incorporate negative screening into their investment process—RI equity funds (+$42.2 billion) and RI fixed income funds (+$10.7 billion). From there we can dig even deeper, the two most popular negative screens over the past year were surrounding weapons and tobacco. RI equity funds that negatively screened against weapons attracted $35.9 billion over the trailing 12-month period.

This hierarchy of characteristics provides both a general breakdown of funds while giving the ability to create more granular groupings based on specific responsible investing approach.

Refinitiv Lipper delivers data on more than 330,000 collective investments in 113 countries. Find out more.

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