Peace, Justice, and Strong Institutions Led Flow Receivers

Two of the four ESG investing strategies, ‘ESG Thematic’, and ‘Exclusion Screening’, managed to attract new investor money whereas ETFs aligned to the Sustainable Development Goal (SDG) number 16 led last week’s flow receivers having brought in USD$188 million. Products aligned to SDG 13 came in second with USD$86 million of new assets globally.

Investors Supported Sustainable Development Goals Number 1, 13, and 16 

Investors steered their capital into Peace, Justice, and Strong Institutions, the 16th Sustainable Development Goal (SDG), pushing it to become the flow leader among the 17 SDGs. ETFs aligned to this goal led the flow receivers last week registering USD$188 million in net inflows reversing the previous week’s USD$22 million net outflows. The trend appears to have been driven mostly by the big cash influx experienced by the First Trust NASDAQ Cybersecurity ETF (ARCX:CIBR). The fund announced a quarterly dividend that was paid on March 31st. This was followed by institutional investors and hedge fund managers increasing their stake in the ETF. ARCX:CIBR brought in USD$167 million of inflows over the week, equivalent to 90% of total flows into ETFs adopting the SDG 16.

ETFs investing in securities aligned to the 13th SDG, Climate Action, were the second most appealing to global investors last week. They attracted a total of USD$86 million of investor capital, an 82% decrease from the previous week’s USD$490 million net inflows. Statements from the United Arab Emirates government played a crucial role in luring investors. The minister of climate change and environment stated that Sheikh Mohamed bin Zayed Al Nahyan, the UAE’s President, plans to invest USD$50 billion in climate action efforts which will translate into the deployment of clean energy solutions at home and abroad.

Similarly, ETFs adopting the No Poverty theme – the first Sustainable Development Goal– attracted ten times the previous week’s net inflows. The 9 ETFs aligned to SDG 1 brought in USD$41 million of net inflows, compared to the previous week’s cash inflows of USD$4 million.

ETFs in play:

• Climate Action ETFs
• No Poverty ETFs
• Peace, Justice, and Strong Institutions ETFs

ESG Thematic and Exclusion Screening Appeal to Investors

Only two of the four ESG investing strategies witnessed an influx of cash over the past week. Most notably ‘ESG Thematic’ was the most appealing to investors. The strategy attracted USD$270 million of investor capital followed by ‘Exclusion Screening’ with USD$131 million. On the other hand, ETFs adopting the ‘General Integration’ and ‘Best-In-Class’ ESG investment strategies shed USD$161 million and USD$149 million of assets respectively.

In contrast to the previous week, Europe, which manages the majority of ESG assets, and the APAC region were riding a wave of sell-off for the first time in a while. On the flip side, America appeared to be the most attractive to global investors. ETFs domiciled in Europe recorded USD$285 million in net outflows while ETFs in the APAC region shed USD$96 million of assets whereas ETFs domiciled in America managed to attract USD$472 million of investments over the last week.

ETFs in play:

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

Data for this article is as of June 17th, 2022.