A UBS exchange-traded fund focused on ESG investing became the first in Europe to exceed €1 billion ($1.1 billion) in assets, showing that socially responsible financial strategies are growing in popularity.
The UBS ETF (LU) MSCI World Socially Responsible UCITS ETF fund tracks the MSCI World Socially Responsible 5% Issuer Capped TRN index, which includes companies that represent the top quartile on ESG criteria, according to the index’s methodology. Investment flows into the UBS fund were especially strong in May, June and July, according to ETF Strategy.
“This milestone represents a further confirmation of our commitment to meet the increasingly sophisticated needs of investors,” said Andrew Walsh, head of Passive & ETF Specialist Sales for UK & Ireland, UBS Asset Management.
UBS now has 10 socially responsible and ESG ETFs available as part of its push to emphasize sustainable investing. The effort has led to $1.11 trillion in sustainable investment assets under management at the beginning of the year, which is equal to about 36% of its total invested assets. Equally important is the fact that it has steered away from investments that are deemed harmful under ESG standards. UBS reduced its carbon-related assets to $2.7 billion at the beginning of this year, down from $6.6 billion in 2017.
- UBS isn’t the only longtime European asset manager making a push into social impact investing. UK’s Schroders recently announced that it would acquire a majority stake in the impact investing firm BlueOrchard Finance, which was founded in 2001 as the first commercial manager of global microfinance debt investments.
- While millennials are the generation most associated with ESG investing, baby boomers and Generation Xers are increasingly showing interest in the strategy, according to a study from Alliance Life Insurance. Even so, millennials participate in ESG investing at a rate of 17%, compared with Gen Xers at 7% and boomers at 3%.
- With ESG investing growing in popularity, it was only a matter of time before vegans got their own ETF. Beyond Investing, a European company led by three vegan investors, plans to start the US Vegan Climate ETF on the NYSE this fall.
Karma Take: UBS’s ETF crossing into record territory highlights that ESG investing is becoming mainstream as more investors look to make an impact with their money.