EPFR - fund flow & allocations data

Our Financial Intelligence leaders discuss ESG Investing Landscape: What’s Driving Momentum

IGM Credit

Global ESG Issuance Trends 1H 2021 Edition

• Global issuance of ESG bonds tracked by IGM in the first half of 2021 surpassed all of 2020's issuance to total USD 474.79bn on 595 tranches. This compared to last year's ESG issuance of USD 468bn on 530 tranches. • Q2 ESG issuance came in a touch lower than Q1's record quarter issuance of USD 251.67bn at USD 223.11bn but still represented the 2nd largest quarter of ESG issuance per IGM's records and 97% higher than Q2 2020. • Green bonds remain the favored theme and comprised 44% of total ESG issuance over Q2 at USD 98bn versus 40% in Q2. • Sustainability-Linked bond issuance stood out in Q2 however with issuance surging to a record USD 26.28bn, more than the accumulated volume from when the 1st SLB was issued in Sep 2019 to end Q1 2021, of USD 15.789bn. • The 10 largest tranches in Q2 (and H1) once again came from Europe or cross border* issuers, of which the largest ESG issuer continues to be the EU via its SURE Social Bond framework. Consequently Euros, SSAs and Investment Grade proved once again to be the predominant currency, sector and rating categories of ESG issuances. • ESG now comprises around a quarter of all European issuance, led by green & social bonds. • Q2 ESG issuance by US issuers was the 2nd largest on record after Q1's record volume of USD57.74bn at USD 51.55bn and represents a 34% rise vs Q2 2020. Issuance in the US has gained four fold from Q2 2020 but still represents a mere 8% of US issuance volumes, signalling room for expansion. • China has leapt onto the ESG bandwagon and now represents the 4th largest global issuer ex supras after France, Germany and the US, with issuance from Chinese issuers surging 91% in Q2 vs. Q1 to USD 7.97bn and USD 11.47bn for 1H. From 2% this time last year, APAC US$ ESG issuance now comprises over 16% of all APAC US$ issuance.

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EPFR - fund flow & allocations data

Regulators turn their sights on ESG ratings agencies

EU and UK regulators are planning to scrutinize the role and transparency of environmental, social and governance (ESG) ratings providers. It is a potential can of worms, but they must open it. As ESG investments keep growing in popularity, many fund managers and financial advisers rely on ratings providers when picking funds and shares. Dramatic demand for these assets shows no sign of abating — socially responsible and ESG equity funds have just posted their 24th weekly inflow so far this year, according to EPFR data...

EPFR - fund flow & allocations data

Pace of Green - One fund steals march in Mexican ESG

It’s amazing how much money one fund can gather when it hits a sweet spot. Last month, money poured into the Mexican ESG category, continuing a strong run that started in August last year, according to EPFR data. But all these flows were driven by just one exchange-traded fund (ETF) - iShares ESG MSCI Mexico...

EPFR - fund flow & allocations data

EPFR – Rebound vs. Recovery; looking beyond reflation

Looking beyond reflation… Coming into 2021 investors were seeking exposure to the green-tinged global reflation story they expect in the second half of this year and hedging against the inflation they fear will accompany renewed growth. This tension between reflationary and inflationary expectations also kept volatility in the spotlight. These themes have persisted during the first quarter. Equity funds with global mandates have posted inflows every week year-to-date, as have equity and bond funds with funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates. At the same time Inflation Protected Bond Funds have absorbed fresh money for 20 straight weeks and Bank Loan Funds, traditionally used to play rising short-term interest rates, for 14 consecutive weeks...

EPFR - fund flow & allocations data

Waiting to read the writing on the wall

Markets moved sideways – albeit at elevated levels -- and money piled up in US liquidity funds for much of the week ending April 28 as investors waited on a slew of key earnings reports, the conclusion of the US Federal Reserve’s latest policy meeting and US President Joe Biden’s address to both Houses of Congress. Some compelling earnings reports from technology bellwethers drove US indexes to new record highs as the latest reporting period wound down. While largely marking time, investors did stick to their recent game plan of buying exposure to global and US growth, taking out insurance against higher inflation, greening their portfolios and keeping cash on hand. US Equity Funds posted their 11th inflow in the past 12 weeks, Global Equity Funds extended their longest inflow streak since 2017, combined year-to-date flows into Equity and Bond Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates moved north of the $150 billion mark and Inflation Protected Bond Funds chalked up their 23rd consecutive inflow. Overall, EPFR-tracked Equity Funds absorbed a net $10.5 billion during the fourth week of April – with Dividend Equity Funds extending their longest run of inflows since 4Q19 -- while Balanced Funds took in $685 million, Alternative Funds $1.3 billion and Bond Funds $13.7 billion. Money Market Funds, despite the biggest weekly outflow from Japan Money Market Funds since late 4Q18, pulled in $57.3 billion as they chalked up their eighth collective inflow in the last 10 weeks

EPFR - fund flow & allocations data

Pace of Green - Swiss ESG bonds ride market wave but buyers should beware

ESG funds soaked up inflows again in March, and the Swiss bond market was the biggest sponge. Swiss environmental, social and governance (ESG) bond funds attracted a whopping $1.3 billion new investments, 9.1% of its total assets under management. This took total Swiss-based ESG bond assets to over $15 billion, according to fund flow data from EPFR. Swiss ESG bonds have received positive inflows in each of the last 12 months except one. But this momentum accelerated in February, when the Swiss stock exchange (SIX) launched 20 new ESG bond indices, all based on the Swiss Bond Index. SIX also introduced a filter system allowing investors to search for green, sustainability or sustainability-linked bonds...