Monthly ESG ETP Asset Flows Update: Europe Dominates the Market with Green bonds Attracting Investors

Exchange-Traded Products (ETPs) focused on Environmental, Social, and Governance criteria (ESG) maintained their growth trajectory as investors increasingly prioritize sustainable and responsible investing, particularly in Europe.

The European market has emerged as a dominant force in the ESG ETP landscape, with a substantial share of assets, inflows, and diverse product offerings. The EMEA region (Europe, Middle East, and Africa), mainly represented by Europe, accounts for a staggering 71% of total ESG ETP assets and is the only region showing inflows year-to-date (YTD). The region recorded 78% of the total monthly flows in June alone, highlighting the strong investor interest.

In 94% of cases, ESG ETFs follow an underlying index and, as such, fall within the passive investment category. And while it looks as if appetite for these ESG strategies may be cooling somewhat – 101 ETPs have launched in 2023 so far, compared to 381 in 2022 (including 100 actively managed funds) - interestingly, American investors have been withdrawing assets from passive strategies ($-4.8 Bn YTD) and increasing their exposure to actively managed ETPs ($+3.3 Bn YTD).

Among ESG exposures, there has been rapid growth in green bond ETPs in Europe with $8,3 billion of inflows in 2023 to date. This represents 20% of the total investments into fixed income ETPs in Europe and 30% of inflows into ESG products in the region. In terms of the top five ETFs to benefit from the most significant inflows YTD, two are aligned to fixed income strategies.

EMEA

Top 3 ETF Issuer (inflows YTD)

1. Amundi: +$1.3 Bn
2. iShares: +$1.2 Bn
3. BNP Paribas Easy: +$0.66 Bn

Best performing YTD

1. Amundi MSCI Semiconductors ESG Screened: +54.8%
2. VanEck Semiconductor UCITS ETF – USD: +49%
3. Amundi S&P Global Information Technology ESG UCITS ETF DR – EUR (A) : +45%

Best inflows YTD

1. Xtrackers MSCI AC World ESG Screened UCITS ETF 1C - Acc – EUR: +$1.4 Bn
2. BNP PARIBAS EASY JPM ESG EMU Government Bond IG ETF – EUR: +$1.1 Bn
3. iShares € Corp Bond ESG Paris-Aligned Climate UCITS ETF (Dist) – EUR: +0.7 Bn

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.