Sustainable Fund Flows Turn Negative for First Time in Q4 as Equities Dive Asset Class: Q4 saw net outflows of £2.24bn, driven by large redemptions from equity funds of £3.54bn—the first ever quarter of negative net flows. Classification: Equity US was the year’s best-selling sustainable classification, with inflows of £13.5bn, exceeding the entire annual take for sustainable equities. Active v Passive: In 2024, sustainable passive bond funds attracted £1.84bn with £1.59bn to active, while passive equities took £3.37bn and active £8.68bn. Fund manager: BlackRock enjoyed the highest sales of sustainable funds in 2024, with inflows of £20.55bn, overwhelmingly to equities.

Sustainable Bonds and Mixed Assets in the Red Over Q3 as Equity Increases Asset Class: Sustainable funds took £14.93bn over Q1-3 2024, compared to conventional funds outflows of £7.46bn, with sustainable equities netting £13.68bn. Classification: Equity US is the best-selling sustainable classification, with inflows of £13.5bn YTD. Conventional flows over the period were a more modest £1.6bn. Active v Passive: Passive bond redemptions for Q3 stood at £757m, as active bond funds saw inflows of £90m for the quarter. Fund manager: BlackRock saw inflows of £16.55bn, overwhelmingly to equities.   Note that this report has narrowed its focus from broad

When evaluating the fund flows and assets under management in the European ETF industry by the respective Sustainable Finance Disclosure Regulation (SFDR) articles, one should not be surprised that the European ETF industry is heavily tilted towards article 6. This means the majority of fund flows and assets under management are invested in products which do not take ESG criteria into consideration. In more detail, on August 31, 2024, 1,442.5 bn EUR, or 76.77%, of the overall assets under management were invested in ETFs assigned to article 6 of the SFDR, while 414.9 bn EUR (22.08%) were held by ETFs

Asset Class: Sustainable funds took £15.26bn over the year compared to outflows of £72.18bn for conventional funds (-£31.9bn excluding money market funds). Classification: Equity Global funds were the most popular sustainable classification, netting £6.29bn, followed by US and emerging market equity. Global funds saw the strongest flows for Q4, at £1bn. Performance: Global, US, and EM sustainable equity funds underperformed their conventional peers over 12 months and three years. Fund manager: BlackRock saw inflows of £11.31bn, overwhelmingly to equity funds.   Note that this report has narrowed its focus from broad ESG funds—those which indicate some form of ESG strategy

Refinitiv Lipper’s analysis of environmental, social, and governance (ESG) investments in the UK market Last year tested the resilience of ESG investing, as the growth and tech assets that were the mainstay of many “sustainable” portfolios looked anything but, and oil and gas led the market. Given this, and the rising (and, indeed, justified) concern over greenwashing, concern over the future of sustainable investing grew. Google “death of ESG” and you get a plethora of articles in the financial press, especially over the summer. But, to paraphrase the hoary old Mark Twain quote, reports of ESG’s death have been much

A few days ago, I was asked if the Sustainable Finance Disclosure Regulation (SFDR) and the respective definitions and classifications within the EU Taxonomy are the gold standard for sustainable investing which should be used as a blue print for global regulations. My answer to this question was no. Despite the fact that I think that SFDR and the respective reporting duties under the Markets in Financial Instruments Directive II (MiFID 2) are a good starting point, I think there are still too many blind spots within the regulations which leave too much room for interpretation and may therefore lead

Engagement is seen as one of the keys for successfully implementing and executing an ESG strategy within a portfolio. This is because engagement enables the portfolio manager to get in contact with the senior management of a company and to give them and their investors a voice via voting at shareholder meetings. With regard to this, ETFs are often criticised as failing at these important tasks since they are passive instruments which follow an index and allocate their capital among all constituents of a benchmark index, regardless of their ESG profiles. All the while, they can’t divest from a company

Although the investment industry is normally not a target for public protests or activist campaigns, we witnessed some actions taken by these groups over the course of 2020 regarding the ESG strategies of some asset managers and their ownership of stocks from oil, gas, and coal companies. The ultimate aim of the activists is to put so much pressure on the respective asset managers that they sell their holdings in fossil energy companies. The announcement that ExxonMobil will be replaced by Salesforce (a software company), after being a member of the Dow Jones Industrial Index for 92 years, was widely

In its 2019 annual Financial System Review the Bank of Canada explicitly addressed climate change for the first time, listing it as one of the 6 major vulnerabilities in the Canadian financial system. In the report it cites that insured damage to property and infrastructure in Canada averaged about $1.7 billion per year from 2008 to 2017, up from $200 million per year from 1983 to 1992.  Of course, climate change doesn’t recognize international borders, and the United States has experienced record-level destruction from hurricanes, cyclones, and wildfires in recent years.  According to Boston-based risk modeling firm AIR Worldwide, a

The fight against climate change can feel daunting at times, with economics and regulation providing various obstacles to progress. However, the power sector shows encouraging signs. The cost of electricity generation, including operating expenses and capital expenses, over a plant’s lifetime is now lower for solar and wind power than coal, according to The Economist. Regulators set rates for electricity at a level that covers utility companies’ costs (fuel inputs, for example) and provides a regulated return on capital invested (infrastructure); in the United States this regulated return is about 10 per cent.The varying prices of fuel inputs are simply

Last October The UN Intergovernmental Panel on Climate Change released a report saying we must cut global carbon emissions in half by 2030 to avoid catastrophic consequences. Policymakers, with some notable exceptions, are starting to mobilize with growing support for a “Green New Deal.” Business leaders are also beginning to speak up, talking about the private sector’s responsibility to take the lead in driving towards a “new green” or “circular” economy. However, cutting emissions is only one part of the task at hand. The world’s demand for energy is increasing as populations grow, and hundreds of millions enter the middle

The fact that ESG data is becoming an integral part of many fund managers’ processes is not new information – but a recent roundtable event in Singapore illustrated that institutional investors in Asia are also ramping up their interest in the investment discipline. Julia Gormand, head of market development, investment and advisory for ASEAN at Thomson Reuters and who chaired the day’s discussions, said that one of the key talking points was the fact that ESG is absolutely a key differentiator for all active managers, not just those with a social or environmental conscience. The message from the panel was