NEW YORK, Jan. 22, 2018 /PRNewswire/ — During a year when a number of high profile environmental, social and governance (ESG) related events unfolded, sustainable fund assets under management in the US, including mutual funds, exchange-traded funds (ETFs) and exchange-traded notes (ETNs) achieved limited gains. Estimated net inflows, including new 2017 fund launches, were $2.9 billion or 1.5%.
In a report just released by Sustainable Research and Analysis, author Henry Shilling notes that “while lines in the sector may be blurring in the future, fund flows into the sustainable investing sector should pick up as the segment continues to pivot away from a focus on religious/ethical and exclusionary strategies in favor of integrating ESG factors to improve fundamental investment decisions and with increasing emphasis on shareholder engagement and proxy voting.”
The trend is expected to accelerate with the entry of traditional investment managers. Firms such as JPMorgan, Morgan Stanley, PIMCO AllianceBernstein Investments and Fidelity have entered the sustainable investment sphere with new and repurposed fund offerings. In the process, five traditional organizations shifted about $13.7 billion in assets into the sector, and two firms moved into the ranks of the top 10 based on assets.
These and other managers are expected to continue to introduce more robust product offerings that should lift returns over time. When combined with effective pricing and expanded sustainable oriented disclosures, along with the potential uptake from robo advisor platforms, these developments should serve to attract a larger segment of individual and institutional investors. This should also, in time, open the market to the $7.5 trillion defined contribution plan retirement market.
As is, sustainable funds recorded strong absolute returns in 2017 but large-cap equity funds, based on the performance of the SUSTAIN Large Cap Index, trailed the S&P 500 Index by 265 basis points. Bond funds and world funds, on the other hand, performed well both on an absolute and relative basis.
“Beyond offering sustainable products, traditional managers stepped up their proxy voting and engagements on ESG issues with corporations and this is likely to gain further traction in the coming years,” said Shilling. At the same time, engagements with corporations by sustainable fund managers have led to changes in commitments on products, processes or practices.
The complete report, “Sustainable Fund Assets Under Management Achieved Limited Gains in 2017 But Poised to Increase Traction” is available at: https://www.sustainableinvest.com/?p=1595&preview=truewww.sustainableinvest.com
SOURCE Sustainable Research and Analysis