Home / Business / No area is hotter on Wall Street than ESG with nearly $ 2 trillion in sustainability-focused funds.

No area is hotter on Wall Street than ESG with nearly $ 2 trillion in sustainability-focused funds.



The sustainability-focused fund attracted record inflows during the first quarter, pushing global assets under management in ESG funds to nearly $ 2 trillion, according to Morningstar’s report released on Friday.

This increase underscores the momentum behind ESG investments, or when considering environmental, social and governance factors. Assets in these funds hit $ 1 trillion in the second quarter of 2020.

Global Sustainable Funds generated a record high of $ 1

85.3 billion in the first quarter of 2021, up 17 percent year-over-quarter. Overall, assets in ESG funds increased 17.8% compared to the fourth quarter of 2020.

“2021 kicks off at the end of 2020 with an unprecedented demand for sustainable investment options around the world,” said Hortense Bioy, Morningstar’s director of global sustainability research.

Europe accounts for more than 79% of all capital flows, although more regions are earmarking more and more ESG funds.

In the United States, sustainability-focused funds attracted nearly $ 21.5 billion of net inflows, a new record. The figure is more than twice the year-on-year, up from $ 10.4 billion in the first quarter of 2020 and about five times higher than the first-quarter 2019 stream.

According to Morningstar, the five funds that attracted the most inflows in the first quarter were the iShares Global Clean Energy ETF, iShares ESG Aware MSCI USA, First Trust Nasdaq Clean Edge GreenEnergy, iShares ESG Aware MSCI EAFE and iShares ESG Aware MSCI EM.

Sustainability-focused funds that attracted the most money in Q1.

Fund name Ticker Q1 Money inflows billions
iShares Global Clean Energy ICLN $ 1.98
iShares ESG Aware MSCI USA ESGU 1.33 coins
First Trust Nasdaq Clean Edge GreenEnergy QCLN $ 1.00
iShares ESG Aware MSCI EAFE ESGD $ 0.87
iShares ESG Aware MSCI EM Esge $ 0.82

ESG investments gained momentum before the pandemic. But it has since accelerated from a number of factors, including disproportionate deaths of COVID to minorities, social unrest in the United States, as well as violent wildfires and winter storms. serious

“Over the past year, there has been broad consensus on the need to address climate risk in portfolios,” Morningstar said in a recent report. “Many investors see the green transition to a low-carbon economy as an investment opportunity, so asset managers are rapidly developing new risk management solutions, launching innovative products and bringing back existing ones. “It has been reused to help investors cut their portfolio investments and invest in green solutions,” the company added.

“ESG” is a generic term that can have different investment strategies, part of which is why it faces criticism. Opponents cited a lack of transparency.

For “E” in particular, Morningstar said there were 400 climate-sensitive funds by the end of 2020, the company said, that these could be broken down into five categories: low carbon, climate conscious, green bond, remediation. Climate problems and clean energy / Technology

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