Sifting the proven from the pretenders
It’s not exactly news to report that the profile of sustainable investing has grown significantly in recent months; however, the scale of inflows is worth noting. A recent Morningstar report* shows that assets under management in European sustainable funds increased by 52% in 2020 to EUR 1.1 trillion, due to rising inflows, repurposed assets and rising financial markets. Last year’s flows were EUR 233bn, nearly double those of 2019.
This heightened profile has triggered significant interest amongst the financial advisory community, who are now seeing a rising number of requests from clients for their wealth to be invested in ways that are sustainable. However the challenge, advisers tell us, is obtaining an independent impact audit to verify the impact credentials of the increasing number of funds clambering for assets in this growing market. This is critically important in order to ensure that investment strategies are aligned with a client’s sustainable objectives.
The challenge is growing. The data* referenced above highlighted:
- a record number of 505 new sustainable funds launched in 2020, which involved
- repurposing and rebranding of at least 250 conventional funds,
- and an all-time high of 147 new funds in Q4.
According to Morningstar the trend seen in 2020 continues through to 2021, with 111 news funds launching in Q1 2021 with sustainable funds attracting EUR 120bn. Overall, sustainable fund assets increased to a record high of EUR 1.3 trillion.
*Source: Morningstar, European Sustainable Funds Landscape: 2020 in Review (Feb 2021)
We therefore believe that most financial planning firms building their own portfolios will need some help in sifting the proven (positive impact generators) from the pretenders!
That’s where Worthstone’s Impact Portal comes in. An entirely independent service and consistent methodology, developed to help advisers scope, screen and rank the funds available in this space. If you would like to know more about our service please get in touch, we’d be delighted to hear from you.
Gavin Francis
Founder and Director