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Welcome to RBC’s Markets in Motion podcast, recorded August 30th, 2021. I’m Sara Mahaffy, ESG Strategist at RBC Capital Markets and I’m excited to be guest hosting the podcast this week. Please listen to the end of this podcast for important disclaimers.
This week in the podcast, I’ll be highlighting some of our recent work around ESG fund flows and trends in new fund launches. The big things you need to know: (1) Inflows into sustainable funds eased back in early 2021, but trends may be stabilizing. (2) we are seeing diverging trends in some of the thematic ESG categories we track, and (3) sustainable fund launches are on pace to hit new highs in 2021.
If you’d like to hear more, here’s another two minutes. While you’re waiting, a quick reminder that you can subscribe to this podcast on Apple, Spotify, and other major podcast providers. If you like the podcast, please rate and review it to help other listeners find the show.
Now, the details.
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Key point #1, Sustainable fund flows have eased back in 2021, but trends may be stabilizing.
- Dedicated sustainable equity funds saw net inflows accelerate in late 2020 and hit new highs in January of this year. However they have eased back in the months following.
- In our latest updates, the downtrend appears to be stabilizing with June and July flows ticking up slightly.
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- Digging down and examining the trends for active vs. passive funds, passively managed sustainable funds have driven the uptick and have been a little stronger than active flows recently.
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Key point #2, We are seeing diverging trends in some of the thematic ESG categories we track
- Among the bigger AUM categories we track, inflows into water and impact funds have been strong throughout most of 2021. Inflows for these categories have been fairly stable without seeing much deceleration.
- Inflows into climate change and environment funds have caught our eye recently as they appear to be ticking higher after easing back earlier in the year.
- However, clean energy flows faded at the start of the year and have stayed weak in recent months.
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- Among the smaller AUM categories we track, the sustainable agriculture and food category has really jumped out to us. This category has seen inflows hit new records month after month in 2021.
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Key point #3, sustainable fund launches are on pace to hit new highs in 2021.
- So far sustainable fund launches are on pace to hit new highs in 2021, surpassing 2020 levels which was a breakout year for sustainable fund launches.
- Most of the new fund launches have been coming out of Europe, but the US and Asia is starting to take share at the margin which we think is really interesting.
That’s all for now. Thanks for listening. And be sure to reach out to your RBC representative with any questions.