U.S. ESG And SRI Funds’ Assets Under Management Break The $1 Trillion Mark In Q1 2021

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Estimated net flows into long-term RI funds for Q1—excluding money markets again—slightly favored actively managed RI funds (+$18.584 billion) over their passively managed RI brethren (+$18.483 billion), but in contrast to their non-RI funds counterparts in both the active versus passive breakouts, all the Lipper RI fund macro-groups witnessed net inflows, including actively managed domestic equity RI funds and passively managed world equity RI funds. In another opposing trend, we saw net redemptions in RI money market funds (-$3.4 billion) as the non-RI funds witnessed net inflows to the tune of $163.6 billion. We have written in the past about the stickiness of assets in this RI subset. Investors appear to be willing to put their money where their convictions are generally for the long haul when it comes to socially responsible investing practices.

Total asset under management continued to favor actively managed RI funds (+$864.2 billion) over their passively managed counterparts ($142.6 billion). And as we have mentioned before, this is more than likely a result of investors’ long-term commitment to SRI practices seen as early as the 1920s in the U.S., when one of the first publicly available SRI funds (Pioneer Fund) used negative screening practices to exclude tobacco, alcohol, and gambling investments from its portfolio. Since then, socially aware practices have continued to evolve and recently take on a more mainstream focus by investors as ESG pillars become standard metrics of investment evaluations.

In line with estimated net flows for traditional funds and ETFs, investors continued to favor passively managed RI domestic equity funds (+$14.2 billion) over their actively managed counterparts (+$7.7 billion) for the Q1, but in contrast both remain positive. Whereas like with the non-RI universe, investors continued to prefer RI taxable bond funds, injecting $9.2 billion for the quarter, over their passively managed cousins (+$1.1 billion).

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