ESG funds are providing a safe haven for active fund managers in the face of the ever-rising popularity of passively managed (index) funds.
September saw record inflows for active ESG equity funds. Investors committed a net £392m of new capital, taking the quarterly total of inflows to £1.0bn in Q3, almost ten times as much as Q3 2019. Year-to-date active ESG equity funds have attracted £2.4bn of inflows.
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Key highlights from this month's Fund Flow Index - October 2020:
- Active ESG equity funds enjoyed record inflows in September - £392m
- Active ESG equity fund inflows rose 10-fold between Q3 2019 and Q3 2020
- Traditional active funds suffered £5.7bn of outflows year-to-date while ESG counterparts have seen £2.4bn of inflows
- Index funds are the big winners, seeing £6.1bn of inflows so far in 2020
- Traditional active funds have seen no net inflows of capital over the last four years, though they remain easily the largest category by AUM
- Active ESG equity funds have accounted for all the cumulative new money flowing into active funds since late 2018
- ESG funds help active fund managers differentiate themselves from index funds
Source: Calastone