Bond ETFs with ESG factors look set to receive higher inflows as institutional investors increase their ESG allocations to passive products, which Invesco revealed this week.
The 101 investors surveyed (which Funds Europe reported on Tuesday) mainly expected ESG allocations to flow into ESG equity ETFs - but a quarter of them said it would be fixed income picking up the new money.
In the first half of this year, US$11.5 billion (€9.7 billion) of net new flows were into equity ESG products and only around 7% of the $19 billion of net flows into fixed income ETFs were into funds with ESG considerations, according to the firm.
Bond ESG ETFs are “a relatively new but growing” segment of the ETF market, Invesco said. There are only 36 funds available in Europe, less than a third of the amount of equity ESG ETFs.
Invesco itself has one of them: the Invesco Sterling Corporate Bond Ucits ETF, which the firm said was the first in its asset class in Europe to incorporate ESG criteria.
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