ESG funds

Luxembourg is by far the leading EU domicile for environmental funds, according to a new report by PwC. Assets under management in green funds in the Grand Duchy are greater than the combined totals of the next three largest domiciles for these products. This article explains why this might be so.

Research by French think-tank Edhec shows that ETFs that are so-called “Paris aligned” take the climate score into account for no more than 12% of the factors underlying stock selection. Climate scores, at best, play second fiddle.

“All mutual funds become ETFs”, Detlef Glow, head of research at Lipper, wrote recently. Only passive and “real” active remain. Considering the inflow of over 500 billion dollars in the first six months into passive, that sounds plausible. But aren’t Lipper missing something? Passive and the hottest topic of the moment - ESG - do not go well together.

BNP Paribas Asset Management recently launched a long-short strategy aimed at companies related to the energy transition. Portfolio manager Edward Lees (photo) explains how the fund is putting pressure on non-sustainable companies and thus achieve a positive impact on the energy transition.

Vanguard and UBS have launched ESG funds, taking advantage of the increased popularity of sustainable investing in the wake of the coronavirus pandemic. Orchard Capital Management, by contrast, sees the deep unpopularity of value stocks as the perfect opportunity to launch a US value small cap fund…

Whereas European equity funds suffered substantial outflows during the coronavirus crisis, their ESG counterparts held up much better. Moreover, the assets under management are now higher than at the start of the year. This is partly due to the arrival of investors who had never thought of ESG investing before, says Michael Lewis of asset manager DWS.