Ethical, responsible and sustainability-themed ETFs reached $9.2 billion in funds under management (FUM) at the end of 2022 across 52 funds, according to data released by Betashares.
This was up from $7.5 billion across 30 funds at the start of 2022 and came despite a marked increase in market volatility over the course of the year. Betashares indicated that Australian investors were electing to take a long-term view of their portfolios.
“Investors and their financial advisers are increasingly drawn to ethical and responsible ETFs as they seek to align their portfolios with their values while also meeting their investment objectives,” commented Betashares’ responsible investment director, Greg Liddell.
“As part of this trend, more investors are placing more of their portfolio in ethical, responsible and sustainability-themed ETFs to meet these complementary goals.”
Betashares noted that it and the broader Australian ETF industry have expanded the universe of ethical and responsible ETFs available, with 22 additional funds launched in the category during 2022, including options related to solar, electric vehicles and energy transition metals.
“As a result of this work, investors are able to build a responsible portfolio across a growing range of asset classes including equities, bonds and other assets,” said Mr Liddell.
The ETF provider noted that 2022 also marked an increase in stewardship activities by fund managers, which it said was perhaps best reflected by the refresh of the AGL board.
Mr Liddel said that it was clear that the future of responsible investing will increasingly be about the ability to link investment and stewardship activity with positive outcomes.
“Climate change transition, biodiversity, diversity, and the empowerment of women are all topics of concern to a greater number of investors and will result in more impact and sustainability-themed products in these areas,” he said.
“Stewardship is of increasing value, particularly for index investors, as more stakeholders are focused on achieving results from their stewardship program, rather than simply citing the importance of engagement.”
In contrast to the growth seen for ethical and responsible ETFs, the FUM of the wider ETF industry fell by 2 per cent or $3.2 billion last year to $133.7 billion.
Betashares reported previously that the industry received $13.5 billion of net inflows in 2022, 42 per cent lower than in 2021 when inflows climbed to their highest level on record.
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
