ESG funds, once thought to be a “passing fad,” continue to grow rapidly capturing more than half the new net money from investors in 2020.
According to Morningstar, $51.1 billion of new investor money went to ESG funds in 2020 which is more than double the amount invested in ESG funds in 2019. This set the fifth consecutive annual record.
ESG funds are screened for environmental, social and governance factors. They are an attractive option for those wishing to invest in a manner that aligns with their beliefs.
According to a recent article, CNBC believes the growth continues as younger investors enter the market and are animated by social justice issues, climate change and wealth inequality. With more assets to invest, they are able to do so aligning with their values.
President Joe Biden has identified climate change as a key issue to his administration which could result in additional inflows.
As the category grows, more and more ESG funds have become available. The number of funds available jumped to 400 last year – a 30% increase from the year prior.
Talking with your clients about ESG investing? We’ve got a few resources for you.