06/08/20

SUSTAINABLE FINANCE: Fund Flows Hit Record in Q2.

As published on internationalinvestment.net, Wednesday 5 August, 2020.

Flows into sustainable funds rebounded strongly after the coronavirus pandemic market sell-off, more than doubling to $54.6bn over the second quarter of 2020, according to Morningstar research.

The record second-quarter inflows were driven by" growing investor interest in ESG issues", especially in the wake of the covid-19 crisis. The disruption caused by the pandemic has highlighted the importance of building sustainable and resilient business models based on multi-stakeholder considerations, Morningstar said.

Another contributing factor to the strong inflows was the continued growth in the number of products making up the sustainable fund universe. From 2,584 at the end of March, the number of funds and ETFs that use environmental, social and governance criteria as a key part of their security-selection process in Europe grew to 2,703.

Overall, 107 new sustainable funds came to European market in the second quarter, drawing level with the 106 launches in the first quarter. Several offer exposure to a theme such as climate change or resource efficiency.

Examples include RobecoSAM Global Green Bonds and DNCA Invest Beyond Climate, while on the passive side, Lyxor launched a suite of Climate Change ETFs that are compliant with the European Union's Paris Aligned Benchmark regulation, as well as thematic ETFs, including Lyxor MSCI Millennials ESG Filtered (DR) UCITS ETF and Lyxor MSCI Smart Cities ESG Filtered (DR) ETF.

In total, passive funds accounted for 26% of new launches.