Pace slows for passive sustainable funds
The pace of passive sustainable fund launches in Australia has slowed with no launches so far this year and only two last year, compared to more than 50 in Europe.
A global report on the passive sustainable landscape by Morningstar found there were 17 passive sustainable funds in Australia with $3.6 billion in assets under management.
The largest provider was Vanguard with nine offerings which represented 65% of the market. The remaining offerings came from VanEck, BetaShares, BlackRock iShares, Russell Investments, and State Street.
Morningstar said there had been four launches in 2018 but this halved to two the following year and none so far in 2020.
This was significantly below the figures in Europe which saw more than 50 funds launched in 2018, 2019 and 2020. Globally, there were 98 launches in 2019 and 84 in the first six months of 2020.
“Examining the most recent entrants to the list, Vanguard launched an ETF and an unlisted fund each in the equity (tracking the FTSE Developed ex Australia Choice Index) and fixed-income (tracking the Bloomberg Barclays MSCI Global Aggregate SRI Exclusion Float Adjusted Index) segments during 2018, while VanEck came out with a sustainable equity ETF (tracking the MSCI World ex Australia ex Fossil Fuel Select SRI and Low Carbon Capped Index) in the same year,” it said.
“However, after the hype of launches in passive sustainable funds in 2018, 2019 was a quieter year, with only two launches, followed by no launches so far in the first six months of 2020.”
Despite the low number of launches, Morningstar said Australia was one of the largest markets outside of Europe and US.
“Outside of Europe and the US, the speed and enthusiasm with which investors have embraced sustainable investing has varied, and this is reflected in the low uptake of passively managed sustainable funds,” it said.
“As of June 30, 2020, assets in passive sustainable funds domiciled outside of Europe and the US totalled $10.5 billion, representing 4.2% of global assets. The growth in the past three years has been driven mainly by net inflows into new product launches, especially in Australia, Canada, and China.”
AUTHOR
Laura Dew
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