Don’t call it a fad. Ethical investing is here to stay


Daniel Balakov | E+ | Getty Images

With billions of dollars flowing into sustainable investing strategies, it’s safe to say it’s no longer a fad.

Investors are pouring cash into funds that use environmental, social and governance criteria to screen the companies they invest in.

Even passive investors are jumping in: There were 534 sustainable index mutual funds and exchange-traded funds globally, accounting for $250 billion as of June 30, according to Morningstar.

More from FA 100:
CNBC ranks the top-rated financial advisory firms of 2020
Stock market is ‘OK,’ right now, says top advisor
Advisors use tech to helps clients adjust to new environment

“I think sustainable investing in one form or another has been around for decades,” said Mona Naqvi, senior director, head of North American ESG product strategy at S&P Dow Jones Indices.

She spoke Tuesday at the CNBC Financial Advisor Summit, a day-long virtual conference for financial advisors.

“What we’re seeing this time around is that the flows are gaining momentum,” Naqvi said. Advances in data collection have helped drive ESG innovation.

“You can still integrate ESG, but design an index that looks and feels like the S&P 500,” she said, adding that this has made the strategy more accessible to mainstream investors.

While ESG strategies are gaining momentum stateside, it could be a while before they become as popular as they are in Europe.

In fact, Europe accounts for more than 75% of global assets in sustainable passive funds, according to Morningstar.

The U.S. represents 20% of these assets, up from 13% three years ago, Morningstar found.

The difference in asset growth is driven at least in part by cultural differences between Europe and the U.S. Investors across the pond are less likely to see sustainability as political matter, said Naqvi.

“The materiality of issues like climate change are more established [in Europe], and it’s not seen as a political issue, but rather a scientific one,” she said.



Source link

Discover

Sponsor

spot_imgspot_img

Latest

RH (RH) Q4 2020 earnings results

Jason Kempin | Getty Images Entertainment | Getty ImagesThe furniture retailer RH, formerly Restoration Hardware, on Wednesday reported fourth-quarter earnings and sales that...

From stocks to bitcoin, Wilmington’s Meghan Shue sees troubling trend

As a record amount of money flows into the market, Wilmington Trust's Meghan Shue sees a troubling trend.Shue, who oversees almost $136 billion...

Vaginal Ring Could Protect Women From HIV for 3 Months

TUESDAY, March 9, 2021 (HealthDay News) -- A vaginal ring that slowly releases an antiviral medication could protect women against HIV for up...

Spain’s PM Sanchez sees positive aspects in Bankia-Caixabank merger

Denis Doyle | Getty Images Spain's Prime Minister Pedro Sanchez on Monday said there were positive aspects in the proposed merger of Spanish...

Pagani Huayra Tricolore is a wild aerobatic special edition

The Italian Air Force's aerobatic team, known as the Frecce Tricolori, is celebrating its 60th anniversary next year. To celebrate, Pagani has created...