Environmental, social and governance (ESG) exchange-traded funds (ETFs) and exchange-traded products (ETPs) listed globally gathered net inflows of US$7 billion during March, bringing year to date net inflows to US$24.88 billion, which is much lower than the US$53.48 billion gathered at this point last year, according to a recent report.
Total assets invested in ESG ETFs and ETPs increased by 3.2% from US$378 billion at the end of February 2022 to US$390 billion, notes research and consultancy firm ETFGI’s March 2022 ETF and ETP ESG Industry Landscape Insights report.
Substantial inflows can be attributed to the top 20 ETFs and ETPs by net new assets, which collectively gathered US$6.3 billion in March. iShares Global Clean Energy UCITS ETF gathered US$722 million, the largest individual net inflow.
The report also highlights:
- Assets of US$390 billion invested in ESG ETFs listed globally at the end of March 2022 are the second highest
- Assets decreased 0.03% year to date in 2022, going from approximately US$390.1 billion at the end of 2021 to US$390 billion
- Q1 net inflows of US$24.88 billion are the second highest on record, after 2021 Q1 net inflows of US$53.48 billion
- US$131 billion in net inflows gathered in the past 12 months
- 39th month of consecutive net inflows
- ESG equity ETFs and ETPs gathered US$5.45 billion in net inflows in March.
“The S&P 500 increased by 3.71% in March but is down 4.6% in Q1,” says Deborah Fuhr, managing partner, founder and owner of ETFGI. “Developed markets, excluding the US, increased by 1.1% in March but are down 5.57% in Q1. Australia (up 10.46%) and Portugal (up 6.50%) experienced the largest increases among the developed markets in March.
“Emerging markets decreased by 2.27% during March and are down 6.52% in 2022. Egypt (down 14.31%) and China (down 8.34%) witnessed the largest declines among emerging markets in March, while Brazil (up 14.51%) and Colombia (up 11.98%) gained the most.”
Confusion persists around what constitutes an ESG fund, with 56% of adopters believe there is a lack of clarity in ESG definitions, according to Principles for Responsible Investment, a UN-supported initiative that seeks to understand the investment implications of ESG issues.
ETFGI’s classification system attempts to provide greater precision, with ETFs and ETPs listed globally organized into categories, including core ESG products and theme-based groups, such as clean and alternative energies, and gender diversity.