Wall Street fund managers are cranking up the production line for sustainability-linked ETFs as investor demand defies this year’s rates and Russia-driven market turmoil.
Q1 2022 hedge fund letters, conferences and more
At least 20 ESG-focused exchange-traded funds have launched in the U.S. this year through Wednesday, according to data compiled by Bloomberg. While comparisons are difficult to make because of evolving classifications, that’s roughly double a tally of nine from the same period in 2021, and compares with two in 2020 and just one in 2019.
The acceleration is a bid by issuers to grab a slice of a sector that punches above its weight in terms of winning new cash. Products targeting investments with higher environmental, social and governance standards represent about 4% of the $10 trillion global ETF market by assets, yet have gathered almost $25 billion of 2022 inflows -- around 8% of the total.
“Despite a shifting economic environment, investors are gaining comfort in investing with an ESG lens in 2022,” said Todd Rosenbluth, head of research at ETF Trends. “Asset managers are rounding out their ESG suite of products to provide investors with more tools to build broadly diversified ETF portfolios.”
It’s all underscores a bounceback in demand for ESG investment vehicles, even as rising borrowing costs and Russia’s invasion of Ukraine roil assets globally. Earlier this year, it appeared investor appetite was waning as a broad U.S. stock selloff sent traders looking for safety.
But the long-term outlook remains positive. Almost 90% of ETF investors globally plan to add ESG exposure to their portfolios, according to the results of a survey by Brown Brothers Harriman released last month.
Read the full article here by Peyton Forte, Advisor Perspectives.
