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