More than 250 funds were rebadged as ‘sustainable’ last year. According to data from Morningstar, 253 European funds changed their strategy or investment profile to a more ESG friendly one in 2020 – 87% of which rebranded themselves with terms including “green” and “ESG”. A further 505 new ESG funds were launched over the period, and assets invested in ESG funds totalled €1.1trn at the end of December. Inflows into European funds accounted for 80% of the global inflows in Q4 2020.
Companies leading the clean energy transition outperformed the MSCI ACWI Broad Market Index by 34.74% and MSCI ACWI/Energy Index of fossil fuel companies by 127.24% on average. The analysis, compiled by As You Sow and Corporate Knights, is based on the seventh iteration of their ‘Carbon Clean 200’ list.
Amundi has launched an emerging markets green bond fund. The actively managed fund, open to both retail and institutional investors, will be invested in hard currency green bonds primarily from corporates, but with some exposure to sovereign debt in emerging markets including Brazil and India.
Manulife Investment Management has launched a Sustainable Asia Bond Fund that “seeks to invest in Asian fixed-income securities with superior sustainability attributes”.
Legal & General Investment Management has launched a green bond ETF. The fund tracks the JP Morgan ESG Green Bond Focus Index and will provide exposure to green bonds issued across hard currency credit and local currency government bonds. It favours deals with a review under the Climate Bonds Initiative standards.
S&P Dow Jones Indices has announced the launch of the S&P MidCap 400 ESG Index and the S&P SmallCap 600 ESG Index. The pair are designed to closely replicate the risk and return profile of their underlying benchmarks while providing a significant boost in ESG score performance. Weapons, tobacco and thermal coal companies are excluded, as are those which rate poorly on the UN Global Compact principles.
ESG ETFs saw a net inflow of $89bn in 2020 according to Bloomberg Intelligence, a threefold increase on 2019 and tenfold increase on 2018.
Northern Trust Asset Management has launched a Sterling Ultra-Short ESG Strategy, investing in securities with a target duration of one year and a maximum maturity of five years.