With a recent survey by State Street ETFs showing that some 83% of professional investors questioned expect demand for ESG ETFs to increase over the next five years, TrackInsight looks at the future of the sector. The diversity of the funds on offer means concrete statistics are hard to gather, but what is it that investors want from ESG and which providers can rise to the challenge?
Assets under management in ETPs and ETFs globally have surpassed the $5trn mark after a record-breaking month of inflows in January 2018, with equity ETFs seeing particularly strong inflows before the sell-off that cooled some of the heat in the stock market at the end of the month.
The European ETF market saw assets soar some 40% in 2017, the best rate it has seen since 2009, and experts are predicting further boosts from various factors, including the introduction of the MiFID II regulation in Europe early this year.
Bond ETFs have enjoyed massive popularity over the past few years and total assets now already stand at $750bn, but BlackRock is predicting this figure could double by 2022 as demand continues to grow.
US investors have started selling their exposures to European equity ETFs as a strengthening dollar is drawing attention to domestic assets, while European counterparts continue to buy into local equities. Elsewhere, US financials are on track for the biggest annual inflows since 2013.
US-based ETF investors are withdrawing en masse from currency-hedged international funds, despite advice to the contrary. The three largest currency-hedged ETFs in the US have seen combined outflows of around $3.5 billion so far this year as the US dollar has declined more than 9% against rival currencies.