ESG fund launches increase five-fold
There have been five times the number of responsible/ethical/sustainable funds launched in the last five years compared to the previous five-year period, according to data, reflecting the “greater sense of urgency” by firms to adopt these principles.
Of the 60 responsible/ethical/sustainable funds in the Australian Core Strategies universe, more than a third have been launched in the past five years.
According to data from FE Analytics, there were 25 funds with this designation launched between 2015 and 2020. This compared to just five funds launched between 2010 and 2015.
The findings echoed comments by Zenith Investment Partners who said there had been “a greater sense of urgency” regarding adoption of responsible investing principles, specifically in exchange traded products (ETPs).
The most recent fund to launch was the Fidelity Sustainable Water and Waste fund which was only launched in June 2020, one of only a handful of funds to launch during the COVID-19 pandemic.
At the time, Fidelity said: “Australian investors are increasingly focused on environmental concerns in particular as they become more aware that their investments can have a direct impact on the important topics of climate change and water scarcity”.
All of the exchange traded funds (ETFs) available had been launched in this period; these were Russell Australian Responsible Investment ETF, UBS IQ MSCI Asia APEX 50 Ethical ETF, UBS IQ MSCI Australia Ethical ETF, UBS IQ MSCI World ex Australia Ethical ETF which were all launched in 2015 and VanEck Vectors MSCI Australian Sustainable Equity ETF and VanEck Vectors MSCI International Sustainable Equity ETF which were launched in 2016 and 2018 respectively.
The best-performing fund launched in these five years over one year to 30 September, 2020, was Australian Ethical Emerging Companies which returned 19.5% followed by the UBS IQ MSCI Asia APEX 50 Ethical fund which returned 14.1%.
The five funds launched between 2010 and 2015 were Altius Sustainable Bond, Australian Ethical Advocacy, Australian Ethical Fixed Interest, AXA IM Sustainable Equity and Mercer Socially Responsible Australian Shares.
Dugald Higgins, head of real assets and listed strategies at Zenith, said: “Defining responsible investing is, by its nature, highly subjective and reliant on a framework of judgements on issues, implementation and stewardship.
“As a result, the debate is increasing from pundits on all side. Is true responsible investing possible via an index-based approach? We see a new battleground emerging in the old active versus passive debate.
“Investors need to understand which managers have deep active engagement capabilities and how effective these are in ultimately shaping outcomes,” he said.
AUTHOR
Laura Dew
Recommended for you
The alternative investment manager has signalled its intentions to repackage an existing fund into a second private equity vehicle, targeting both listed and unlisted opportunities.
The acquisition of Mason Stevens by Adamantem Capital has reached completion, as the wealth platform looks to increase investment into its services for Australian wealth practices.
Platinum Asset Management and VanEck have both announced name changes to multiple of their ETFs to clarify their complexity.
Active ETFs are gaining traction in Asia-Pacific as wealth managers seek to blend the low-cost fees of passive with active management.
