USD$873 million poured into ESG ETFs globally 

ETFs aligned to the Sustainable Development Goal (SDG) number 1 were among the few to maintain their inflow momentum, topping the flow receivers’ list last week with USD$87.93 million. Products aligned to SDG 7 followed with USD$65.93 million of new assets globally. Meanwhile, all four ESG investing strategies, ‘Best-In-Class,’ ‘ESG Thematic,’ ‘Exclusion Screening,’ and ‘General Integration,’ also attracted new investor money.

European investors move money into No Poverty (SDG 1)

No Poverty, the Sustainable Development Goal number 1, led the flow receivers last week despite the negative performance of the 9 ETFs aligned to it, registering USD$87.83 million in net inflows. There are yet any US domiciled products aligned to this SDG. The trend appears to have been driven primarily by European investors, with ETFs domiciled in the region attracting all the inflows over the last week. 

SDG 7 – Affordable and Clean Energy ESG ETFs came in second

ETFs investing in securities aligned to the 7th SDG came in second last week in terms of the most inflows. They maintained their attractiveness, though to a much lesser extent. Affordable and Clean Energy ETFs rebounded from dropping USD$96.27 million of assets in the prior week to attracting the second-highest volume of inflows last week, pulling in USD$65.93 million of investor capital. Inflows seem to be propelled by a tight lithium supply boosting returns. The supply has outpaced demand by a wide margin threatening electric car manufacturers’ ability to make electric vehicles more competitive from a cost perspective compared to their internal combustion engine counterparts. Several studies suggest that buyers are expected to pay an additional USD$1,000 when purchasing an electric vehicle in the United States at the current lithium price levels. Lithium prices remained 65% higher year-to-date, having soared 500% in a year.

ESG ETFs with the biggest outflows of the week

At the other end of the spectrum, ETFs aligned with Climate Action (SDG 13) and Industry, innovation, and infrastructure (SDG 9) shed the most assets. The former recorded USD$26.02 million in outflows driven by an exodus in the American market, where ETFs lost USD$78.91 million of assets compared to an inflow of around USD$52.88 million in Europe. Meanwhile, the latter registered USD$15.94 million in net outflows across all regions.

Europe, which holds most ESG assets under management, appealed most to investors. In contrast, America was still riding a wave of selloffs for the third consecutive week and shed USD$383.78 million of assets. ETFs domiciled in America recorded USD$383.78 billion, while ETFs in the APAC region netted USD$6.32 million in net inflows, only to be dwarfed by ETFs domiciled in Europe, having added USD$1.25 billion of assets.   

ETFs in play:

• Affordable and Clean Energy ETFs
• Climate Action ETFs
• Industry, Innovation, and Infrastructure ETFs
• No Poverty ETFs

Exclusion screening succeeded in attracting investors

All four ESG investing strategies witnessed a cash influx over the past week. Most notably, ‘General Integration’ was the most appealing to investors. The strategy attracted USD$542.79 million of investor capital, by far the highest among the strategies. ‘ESG Thematic’ and ‘Exclusion Screening’ came in as second and third in terms of flows. They pulled in USD$162.36 million and USD$107.74 million, respectively. ‘Best-In-Class’ attracted the least, netting USD$60.14 million in inflows. 

ETFs in play:

• Best-In-Class ETFs
• ESG Thematic ETFs
• Exclusion Screening ETFs
• General Integration ETFs 

Data for this article is as of May 27th, 2022.