ESG and Active ETFs Witnessed Unprecedented Inflows in 2020 | ETF Trends

As the global exchange traded fund market accumulated $7.6 trillion in total assets under management over 2020, actively managed and ESG principles stood supreme.

According to TrackInsight data, global investors funneled $80 billion in net inflows to Active ETFs, which grew by 55%, hitting a new high of $273.5 billion in assets. With almost 200 new Active ETF launches in 2020, there are now over 1,052 listed Active ETFs on global exchanges.

Meanwhile, ESG ETFs reached a tipping point in 2020, experiencing 223% growth over the year, with a new record of $189 billion in total assets under management. ESG ETFs attracted $97 Billion in net inflows over 2020 and almost 200 new ESG ETFs launched during the same period. Looking ahead, the ESG theme is set to become a new battleground for issuers over 2021.

ESG and Active ETFs also stood out in terms of overall performance. Five of the top 10 best performing non-leveraged ETFs globally followed an ESG approach, and three of the top 10 tracked active strategies. They all delivered triple-digit returns to investors over 2020.

“ETFs faced an acid test in 2020 and passed with flying colours. The tremendous growth we have witnessed demonstrates how ETFs have successfully convinced investors of the benefits of a liquid, tradable and transparent product – especially during volatile markets. It’s also clear that 2020 was a long-awaited turning point for ESG ETFs with huge growth in this sector. With competition for potentially Trillions of dollars of new ESG assets heating up, we expect to see more issuers enter the ESG ETF market over 2021,” Anaelle Ubaldino, Head of ETF Research and Investment Advisory at TrackInsight, said in a note.

All areas of the world experienced double-digit growth rates over 2020. Asia-Pacific was the fastest growing region with ETF assets surging by 28.7% to a new high of $689 billion, with $69 billion in new flows. European listed ETFs expanded by 26.4%, hitting a new record of $1.3 Trillion with $138 billion in new net inflow. Meanwhile, the North American market grew 24.1% to an all-time high of $5.6 trillion in assets, with $536 billion in new inflows.

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