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October 2, 2020 | less than a minute read

ETFs integrating positive screening for ESG are attracting investors....

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Doug Davison

Partner

Get in touch

Doug Davison

Partner

Investors are pouring more money into ETFs choosing to invest in best-in-class companies scoring high on ESG criteria, rather than ETFs that instead screen so-called "sin stocks" out. The data is quite remarkable and confirms that investors are keen to have more exposure to ESG-centered assets, particularly those seen as "best-in-class." Regulators will of course pay attention to this trend--and without a uniform definition for exactly what "ESG" is--will take a close look at the relevant disclosures and procedures for ensuring that investors are in fact getting what they think they are buying.

Of more than 400 ESG ETFs the data provider examined, representing $83.5bn in assets under management by the end of June 2020, pure exclusion was the least popular strategy representing only $1.8bn in assets under management and attracting only $1.6m in new inflows since the start of the year. This compares with inflows of $6.4bn to thematic funds, $6.1bn for best-in-class and $15.8bn for funds that invested in ETFs that integrate ESG factors into investment selection using positive screening alongside exclusion approaches.