Investors Turning to ETFs to Get Their ESG Fix | ETF Trends

Socially responsible investments could get a boost from exchange traded funds investors this year.

According to the 8th annual Global ETF Investor Survey conducted by Brown Brothers Harriman, 72% of global ETF investors plan on raising their ETF allocation over the next year with a focus on thematic, ESG, and semi-transparent active ETFs.

“2020 was a year of volatility, but it was also a banner year for ETFs,” Shawn McNinch, Global Head of ETF Services at BBH, said in a note. “The resiliency of the ETF structure and supporting capital market infrastructure saw them not only weather the storm but cement their status as a go-to option for investors to trade, especially in times of market stress.”

Survey respondents indicated that in five years, 56% of ETF investors expect to have at least 11% of their portfolios invested in ESG ETFs. Many pointed to the lack of standardized industry criteria and varying track records as inhibitors of more widespread adoption.

Other key findings from the survey show there’s an appetite for active ETFs. About 65% of respondents showed plans to increase their exposure to active ETFs, compared to 57% in 2020. Over half of U.S. ETF investors also expect to buy a semi-transparent active ETF in the next six months.

In addition, thematic ETFs are going more mainstream, with 80% of investors planning to increase their allocation to thematic ETFs this year.

Meanwhile, the survey found that 66% of respondents plan to increase fixed income ETF allocations in 2021 and 42% said they would buy fixed income ETFs during periods of heightened volatility. These investment vehicles offer greater transparency and liquidity when compared to individual bonds.

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