Assets of European ESG funds surge to €880bn

The European sustainable fund market reached a new milestone in the third quarter of 2020 — reaching €880 billion of assets under management, according to a Morningstar report.

Assets were up from £720 billion at the close of the second quarter, a 10% increase.

This compares with just a 1.6% increase in assets for the overall European fund universe.

Sustainable fund assets now account for 9.3% of total European assets.

Morningstar said European sustainable fund flows remained steady in the third quarter at €52.6 billion.

While this is slightly down from €55.5 billion in the second quarter, it represents a bigger share (40%) of overall European fund flows for the period.

Another contributing factor to the strong sustainable fund flows was the continued growth in the number of ESG products available to investors.

“We have so far identified 105 new ESG funds that hit the shelves in the third quarter of 2020, which brings to total number of new sustainable offerings so far this year to a new record 333,” said the Morningstar report.

“This compares with 265 over the same period last year.

“It is fair to say that this high level of product development is unprecedented, spurred by European regulation, which aims to divert even more money into sustainable products to meet Europe’s Paris Accord targets.

“With its Sustainable Finance Action Plan, the European Commission aims to reorient capital towards sustainable activities and align to the EU goal of being net zero carbon emission by 2050.

“While broad ESG funds continued to represent the bulk of new offerings, some 27 new funds with an environmental flavour came to market in the third quarter of the eyar, accounting for 26% of total sustainable fund launches over the period.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.