Data continue confirming the climate is right for environmental, social, and governance (ESG) ETFs, such as the FlexShares STOXX US ESG Impact Index Fund (CBOE: ESG) and the FlexShares STOXX Global ESG Impact Index Fund (CBOE: ESGG).
In a note out Friday, ETF research firm ETFGI said global ESG ETF assets under management swelled to $100 billion last month.
“The products gathered net inflows of US$6.76 billion during July, bringing year-to-date net inflows to a record US$38.78 billion which is significantly higher than the US$12.37 billion gathered at this point last year and the US$26.71 Billion gathered in all of 2019,” according to ETFGI.
ESG seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the STOXX® USA ESG Impact Index. The underlying index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to ESG characteristics relative to the STOXX® USA 900 Index, a float-adjusted market-capitalization weighted index of U.S.- incorporated companies. Under normal circumstances, the fund will invest at least 80% of its total assets in the securities of the underlying index.
“Total assets invested in ESG ETFs and ETPs increased by 14.7% from US$88 billion at the end of June 2020 to US$101 billion, according to ETFGI’s July 2020 ETF and ETP ESG industry landscape insights report,” notes ETGGI.
ESGG seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the STOXX® Global ESG Impact Index. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to environmental, social, and governance characteristics relative to the STOXX® Global 1800 Index, a float-adjusted market-capitalization weighted index of companies incorporated in the U.S. or in developed international markets. The fund will invest at least 80% of its total assets in the securities of the index and in ADRs and GDRs based on the securities in the index.
ETF issuers can make further inroads with advisors and investors with ESG products if education is amplified because there’s still some confusion in the marketplace regarding ESG funds.
“Confusion persists around what constitutes an ESG fund. According to PRI, a UN-supported initiative that seeks to understand the investment implications of ESG issues, 56% of adopters believe there is a lack of clarity in ESG definitions. ETFGI’s classification system attempts to provide greater precision, with ETFs/ETPs listed globally organized into categories, including core ESG products and theme-based groups, such as Clean/Alternative Energies and Gender Diversity,” notes ETFGI.
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