Asian Sustainable Funds Win Record Inflows as Investors Seek ESG
Investors pumped record amounts of cash into Asian funds with environmental, social and governance mandates
(Bloomberg) -- Investors pumped record amounts of cash into Asian funds with environmental, social and governance mandates in the most recent quarter as appetite for sustainable investing grows during the coronavirus pandemic.
Active and passive funds based in the Asia Pacific region excluding China brought in a record $8.8 billion in the three months ended September, according to Morningstar Inc. data released this week. Flows nearly quadrupled from the previous period in Australia and New Zealand, while a fund launch in Japan attracted billions.
The pandemic -- and the death in its wake -- has made more people want to invest with a conscience. And many large asset managers have been touting the outperformance of their ESG investments this year. The booming interest in ESG has driven the total assets across active and passive sustainable funds in Asia to more than $30 billion.
Japan was the biggest contributor to fund flows, with the Morgan Stanley-run Global ESG High Quality Growth Equity fund drawing in $5.5 billion after launching in July. Meanwhile, Australia and New Zealand sustainable funds attracted record inflows of $815 million, with Australian Ethical Investment Ltd. and Vanguard Group Inc. among the biggest product providers.
Taiwan recorded the strongest inflows outside of Japan, drawing about $800 million, thanks to new fund launches. Third-quarter data for China was excluded as it wasn’t available, Morningstar said.
The research showed that Asia, where ESG considerations have been less prominent than in other regions, is catching up with the U.S. in terms of investor demand. Funds domiciled in the U.S. attracted $9.8 billion in the last quarter.
Asia accounted for about 11% of global inflows and 3% of sustainable fund assets globally, with Europe’s fund industry the most dominant. There are currently about 400 funds that claim to have a sustainability objective or incorporate ESG criteria in their processes in Asia, similar to the U.S. but far behind the almost 3,000 in Europe.
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