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4 Factors Why ESG ETFs Are Likely to Heat Up in Q2
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The environmental, social and governance (“ESG”) investing trend has remained a hot favorite among investors since the pre-outbreak period. Wall Street had recorded the worst quarter to start 2020 since the fourth quarter of 2008. But ESG ETFs had appeared somewhat resilient to acute selloffs in the first quarter of 2020 (read: Here's Why ESG ETFs Are Hot Amid Pandemic).
Between 2018 and 2020, total U.S.-domiciled sustainably invested assets under management, both institutional and retail, skyrocketed 42% to $17.1 trillion, per a CNBC article. Notably, BlackRock launched 93 new sustainable solutions in 2020, helping clients allot $39 billion to sustainable investment strategies, which drove a 41% increase in sustainable AUM from Dec 31, 2019.
Investors intend to double their allocations to sustainable products over the next five years, per BlackRock and 20% of investors said that the pandemic has actually put their sustainable investing allocations on the fast-track mode.
BlackRock to Beef Up Positions in ESG
Against this backdrop, the partnership between Temasek and BlackRock — called Decarbonization Partners — is eyeing to strengthen their bets over the ESG investing theme. The entity will launch a series of late-stage venture capital and early-growth private equity investment funds.
The entity commits a total of $600 million in initial capital to invest across the funds, which would also raise money from third-party investors. The first fund has a goal of raising $1 billion, and will comprise capital from both companies.
Investors should note that BlackRock launched two ETFs recently that made a killing right after the debut. The BlackRock World ex U.S. Carbon Transition Readiness ETFLCTD and the BlackRock U.S. Carbon Transition Readiness ETFLCTU are both actively managed and look to invest in companies that are likely to gain from the transition to a low-carbon economy.
LCTU amassed $1.25 billion after its first day of trading, while its ex-U.S. counterpart LCTD fetched in $586 million in assets, probably due to huge institutional investor interest. LCTU's asset generation on its first day is the biggest on record for an ETF, per etf.com.
New Zealand's Efforts to Strengthen Climate Change Law
In another initiative toward a carbon-free climate, New Zealand recently became the first country to launch a law that mandates banks, insurers and investment managers to report the impacts of climate change on their business.
“All banks with total assets of more than 1 billion New Zealand dollars ($700 million), insurers with more than NZ$1 billion in total assets under management, and all equity and debt issuers listed on the country’s stock exchange will have to make disclosures,” per a CNBC article.
JPMorgan Expects More Run in Asia’s Sustainability Funds
Sustainability funds doubled in 2020 — and are set to increase by two more folds in Asia again, according to JPMorgan’s head of ESG research, Elaine Wu, as quoted on CNBC.
Factors like Asian regulators requiring public companies to reveal their ESG data as well as pension funds’ and endowment funds’ request to their asset managers to consider ESG factors during the investment process will act as tailwinds for the space.
Biden Boost in the United States
U.S. President Joe Biden is known as promoting clean energy. The United States once again entered the Paris climate accord – adopted in 2016 – in the Biden era. Biden wants the United States to achieve a 100% clean energy economy and net-zero emissions, no later than 2050 (read: Will ESG ETFs Flourish Under a Biden Presidency? Let's Explore).
Such moves and measures indicate global response toward climate change and focus on ESG investing. Below we highlight a few ESG ETFs that are on the uptrend in the past one-month period.
Top-Performing ETFs in Focus
First Trust Global Wind Energy ETF (FAN - Free Report) – Up 7.36%
Image: Bigstock
4 Factors Why ESG ETFs Are Likely to Heat Up in Q2
The environmental, social and governance (“ESG”) investing trend has remained a hot favorite among investors since the pre-outbreak period. Wall Street had recorded the worst quarter to start 2020 since the fourth quarter of 2008. But ESG ETFs had appeared somewhat resilient to acute selloffs in the first quarter of 2020 (read: Here's Why ESG ETFs Are Hot Amid Pandemic).
Between 2018 and 2020, total U.S.-domiciled sustainably invested assets under management, both institutional and retail, skyrocketed 42% to $17.1 trillion, per a CNBC article. Notably, BlackRock launched 93 new sustainable solutions in 2020, helping clients allot $39 billion to sustainable investment strategies, which drove a 41% increase in sustainable AUM from Dec 31, 2019.
Investors intend to double their allocations to sustainable products over the next five years, per BlackRock and 20% of investors said that the pandemic has actually put their sustainable investing allocations on the fast-track mode.
BlackRock to Beef Up Positions in ESG
Against this backdrop, the partnership between Temasek and BlackRock — called Decarbonization Partners — is eyeing to strengthen their bets over the ESG investing theme. The entity will launch a series of late-stage venture capital and early-growth private equity investment funds.
The entity commits a total of $600 million in initial capital to invest across the funds, which would also raise money from third-party investors. The first fund has a goal of raising $1 billion, and will comprise capital from both companies.
Investors should note that BlackRock launched two ETFs recently that made a killing right after the debut. The BlackRock World ex U.S. Carbon Transition Readiness ETF LCTD and the BlackRock U.S. Carbon Transition Readiness ETF LCTU are both actively managed and look to invest in companies that are likely to gain from the transition to a low-carbon economy.
LCTU amassed $1.25 billion after its first day of trading, while its ex-U.S. counterpart LCTD fetched in $586 million in assets, probably due to huge institutional investor interest. LCTU's asset generation on its first day is the biggest on record for an ETF, per etf.com.
New Zealand's Efforts to Strengthen Climate Change Law
In another initiative toward a carbon-free climate, New Zealand recently became the first country to launch a law that mandates banks, insurers and investment managers to report the impacts of climate change on their business.
“All banks with total assets of more than 1 billion New Zealand dollars ($700 million), insurers with more than NZ$1 billion in total assets under management, and all equity and debt issuers listed on the country’s stock exchange will have to make disclosures,” per a CNBC article.
JPMorgan Expects More Run in Asia’s Sustainability Funds
Sustainability funds doubled in 2020 — and are set to increase by two more folds in Asia again, according to JPMorgan’s head of ESG research, Elaine Wu, as quoted on CNBC.
Factors like Asian regulators requiring public companies to reveal their ESG data as well as pension funds’ and endowment funds’ request to their asset managers to consider ESG factors during the investment process will act as tailwinds for the space.
Biden Boost in the United States
U.S. President Joe Biden is known as promoting clean energy. The United States once again entered the Paris climate accord – adopted in 2016 – in the Biden era. Biden wants the United States to achieve a 100% clean energy economy and net-zero emissions, no later than 2050 (read: Will ESG ETFs Flourish Under a Biden Presidency? Let's Explore).
Such moves and measures indicate global response toward climate change and focus on ESG investing. Below we highlight a few ESG ETFs that are on the uptrend in the past one-month period.
Top-Performing ETFs in Focus
First Trust Global Wind Energy ETF (FAN - Free Report) – Up 7.36%
Nuveen ESG Mid-Cap Growth ETF (NUMG - Free Report) – Up 8.53%
Nuveen ESG Large-Cap Growth ETF (NULG - Free Report) – Up 7.94%
Pacer Military Times Best Employers ETF – Up 5.61%
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