By Drew Voros
Year to date, investors have poured $4.7 billion into socially responsible ETFs—also known as environmental, social and governance (ESG) ETFs—almost twice the total money that went into these funds in 2018. Last year, investors added $2.6 billion to the space.
More than half of this year’s flows went into two specific funds, the iShares ESG MSCI USA Leaders ETF (SUSL) and the Xtrackers MSCI U.S.A. ESG Leaders Equity ETF (USSG), both of which were seeded by the same institutional investor, Ilmarinen. Year to date, SUSL and USSG have taken in $1.4 billion and $1.2 billion, respectively (read: “Institutional Money Comes To ESG ETFs“).
Vanguard, always judicious when it comes to ETF launches, also entered the ESG ETF pool. Below are the ESG ETFs with the highest inflows in 2019:
The common theme between the top flows gatherers is that they are all broad-based, core ETFs designed to supplement or replace vanilla exposure in an asset allocation plan.
Notably, the top-drawing ETFs are almost all low-cost. With one exception, they all have expense ratios below 0.30%; the five ETFs with the biggest year-to-date flows are priced at or below 0.20%.
Assets in the ESG versions of low-cost core ETFs have proven remarkably sticky. For example, SUSL, USSG, the Vanguard ESG U.S. Stock ETF (ESGV) and the Vanguard ESG International Stock ETF (VSGX) have not experienced a single day of outflows since they launched. ESGE and ESGD haven’t seen outflows since mid-2018.
How the rest of the year plays out with these new entrants in terms of flows will be interesting when compared with some of the oldest ESG funds on the market.
Weekly ETF Flows
Overall weekly flows for the week ending Thursday, July 18, tallied $11.5 billion, sending year-to-date inflows to $140.7 billion, ahead of last year’s pace of $137.1 billion.
U.S. equity ETFs pulled in $8.7 billion. Other asset classes weren’t as popular as U.S. equities this week, but they still ended up with net inflows. U.S. fixed income funds pulled in $1.4 billion, and commodity ETFs gathered $807 million.
Drew Voros can be reached at email@example.com
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