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ETFs focused on environmental, social and governance themes make up only about 4% of total ETF assets in the Asia Pacific region, but their market share is growing rapidly.
Cerulli Associates reports that 25 ESG ETFs debuted in the Asia Pacific region in 2020, with an additional 31 ESGETFs listed in the first half of last year.
These products generated an inflow of approximately $ 2 billion in both 2020 and 2019, compared to only $ 159.8 million in 2016. Net flow in the first half of 2021 had already reached $ 1.7 billion.
“Managers in key markets in the region are further launching ESG-themed ETFs to provide cost-effective access to responsible investment products and differentiate themselves in fierce competition.” Cerulli said in a report.
This article was previously published Ignite Asia, Titles owned by FTGroup.
“When asked why they chose ESGETF over ESG mutual funds, asset managers said Cerulli ETFs are easier to implement given managers’ ESG capabilities, and ETFs are more flexible, fluid and low. He said he would offer investment options for costs. “
Total ESG ETF assets managed in Cerulli’s surveyed countries (Australia, China, Taiwan, Japan, South Korea, Hong Kong, Indonesia, Malaysia, India, Singapore) increased from $ 308.7 million in 2016 to June 2021. It increased to $ 12.8 billion as of the month.
Australia, China and Taiwan were major regional players, accounting for 86.8% of total ESG ETF assets in the Asia Pacific region in 2020.
ESG ETF growth is particularly strong in Australia, with sustainable fund assets surged from $ 156.2 million in January 2016 to $ 4.9 billion in June 2021.
Research shows that Gen Z is most interested in ethical investments, with 55% likely to invest in funds that integrate ESG considerations.
China is also strong growthAssets have skyrocketed from $ 15 million in 2016 to $ 3.3 billion as of June 2021. Then there were numerous launches in 2021. President Xi Jinping’s commitment to achieve carbon neutrality in September 2020 Domestically by 2060.
“In China, there were only four new ESGETFs in 2020, but 11 was launched in the first half of 2021, more than half of which have low carbon or new energy themes,” says Cerulli.
In Taiwan, ESG ETF assets increased from $ 101.4 million in 2018 to $ 1.2 billion in 2019 and $ 1.7 billion in 2020. As of June 2021, ESGETF assets were $ 2.6 billion.
Early last year, Taiwanese domestic fund companies Quickly Deploy new ESG-labeled ETFs and plug in the growing desire for low-cost passive vehicles and the growing popularity of sustainable investments.
” [Taiwan] The ESGETF market boom in the first half of this year could be due not only to demand factors, but also to fundhouses rushing to drive ESG strategies before the new regulations are introduced in July 2021. ” Says.
Last July, Taiwan’s Financial Supervisory Commission Layout More stringent standards and disclosure requirements for ESG-labeled funds. Managers need to set at least one ESG goal and allocate more assets to achieve these goals.
Researchers at Cerulli pointed out that the use of robo-advisors has increased throughout Asia over the last decade.
“In Singapore, for example, robo-advisors offer thematic investments, including ESG-themed funds, in addition to traditional goal-based investments,” said Cerulli.
Ng Hao Qin, Associate Analyst at Cerulli, said, “Investors are looking for cheaper alternatives to invest sustainably, so we expect ESGETF to continue to start in the Asia Pacific region. Will be done. “
“There are concerns that such funds may not be sufficient to implement sustainable investment strategies, but ESGs retain the benefits of providing investors with transparency, liquidity and flexibility. Some have proven to be well documented in the process or practice, “he says. Added.
* Ignites Asia is a news service issued by FT Specialists for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends.Trials and subscriptions are available at ignitesasia.com..
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