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Laxman Pai, Opalesque Asia: Environmental, social, and governance (ESG) investments saw a strong performance and an influx of flows in 2020 and are expected to be a key driver of organic asset growth for money managers in 2021 said a study.
"ESG themed investments have seen increasing demand from institutional and retail investors, paving the way for continued growth for this strategy, which is a credit positive for the asset managers that offer it," the Moody's Investors Service said in its new report.
According to the New York-based ratings agency's report, inflows into environmental, social, and governance strategies grew 140% in 2020 from the year before. Since 1995, ESG assets have routinely grown at a compound annual growth rate of 14%, although the growth has picked up rapidly since 2012.
ESG-themed investments saw $80.5 billion in global net inflows in the third quarter, up 14% from the previous quarter. Sustainable fund AUM reached a record high of $1.23 trillion as of Sept. 30, revealed the report "Funds & Asset Management - US: ESG investment outperformance overcomes investor hesitancy, a key barrier to growth".
"The experience of 2020 will help remove investors' worry that ESG investing means giving up returns, which has been a widespread barrier to growth in ESG products," according to Moody's Vice President Stephen Tu.
"Before 2020 and the pandemic, ESG investments had met with frequent retail...................... To view our full article Click here
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