Winston Churchill famously said, “Never let a good crisis go to waste”. What he meant was that in challenging times we must question some of the widely accepted views and look for solutions outside the usual compass. Investors and asset allocators seem to have taken a lesson from the recent pandemic as they have channeled more funds into sustainable funds than they ever did before the crisis.
Globally total net assets in sustainability dedicated funds rose by almost 75% from $1.74tn at the end of 2019 to over $3tn at the close of the second quarter of this year. Inflows were even more pronounced when looking at the much larger “broadly defined” ESG funds. This could be a tipping point for ESG investing.
But of course, there are other financial drivers behind this trend other than just the will to do good. For instance, most sustainable funds overlap with quality and growth styles and those two styles have been in favour post-Covid-19.
Source: Morningstar Direct. Data as of 30 June 2021. Includes ESG integration, impact and sustainable sector funds as defined by Morningstar