Sustainable Funds Continue to Rake in Assets During the Second Quarter
ESG fund flows have already nearly matched last year’s record.
Sustainable fund flows in the United States continued at a record pace in the second quarter of 2020, with estimated net flows of $10.4 billion. That nearly matched first-quarter flows and brought the total for the first half of the year to $20.9 billion, just shy of the annual record of $21.4 billion in sustainable fund net flows set in 2019. Last year’s flows were 4 times the previous record for a calendar year. (above)
Flows are estimated for 315 sustainable open-end and exchange-traded funds available to U.S. investors. The group includes equity, fixed-income, allocation, and alternatives funds that have an ESG, impact, or sustainable sector focus. Funds of funds are not included in this group.
Most of the quarter’s flows came as equity markets rebounded in April. Investors poured $5.8 billion into sustainable funds in April, almost all of it to equity funds. It was the largest monthly flow ever recorded for sustainable funds in the U.S.
While U.S. investors overall poured money into bond funds and pulled record amounts out of stock funds during the second quarter, both stock and bond environmental, social, and governance funds experienced inflows. Investors overall pulled an estimated $137 billion out of stock funds, but ESG investors put $9.3 billion into stock funds. Flows into sustainable equity funds went mostly to passives (73%), but active sustainable equity funds had inflows of $1.8 billion. Four of the top 10 fund flows went to active funds.
Not surprisingly then, for the second quarter in a row, ETFs captured a majority of flows, on the strength of BlackRock’s iShares, which now has 21 ESG funds in its lineup. DWS’ Xtrackers and Nuveen also had success attracting assets to their ESG ETFs for the quarter.
Read the full article from Morningstar that includes a variety of useful charts and graphs.