Australian ESG exchange traded product growth soars

Published on
August 7, 2020
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Australian ESG exchange traded product growth

ESG products grew at almost triple the rate of the rest of theAustralian exchange traded products (ETP) market, according to research by Rainmaker Information.

Three years ago ETP products incorporating Environmental, Socialand corporate Governance principles represented 1% of theAustralian market. Following rapid growth and some impressiveperformance, that proportion tripled to 3% of the market, or $1.8billion as at June 2020.

Since June 2017 the Australian ETP market has grown 31%p.a. from$29.3 billion to $65.6 billion in FUM as at 30 June 2020.

In the same time period ESG products grew 76% p.a. from $325million to $1.8 billion.

Of the nine ESG ETP products, eight are ETFs and one is amanaged fund which is actively managed.

Four invest in Australian equities, three invest ininternational equities and two invest in fixed interest.

The dominant player in the ETP ESG space is BetaShares with 73%of FUM, 71% of the 12 month net funds flow and 72% of the 12 monthrevenue.

"ESG is an investment theme that keeps giving. There isclearly a thirst on the part of investors to align themselves withcompanies that are good for society, or at least are not overtlybad," said John Dyall, head of investment research atRainmaker.

The BetaShares Global Sustainability Leaders ETF is the largestproduct in the space with $705million in FUM as at 30 June2020.

This is followed by the BetaShares Australian SustainabilityLeaders ETF and the Russell Australian Responsible InvestmentETF.

These products manage $536.7 million and $224.5 million in FUMrespectively (as at 30 June 2020).

ESG ETP product fum growth

The Australian ESG ETP market experienced a mixed 12 months toJune 2020, with the withdrawal of UBS Asset Management from themarket in May 2020 dropping the number of ESG ETP products fall 40%from 15 to nine. However this contraction was countered by therapid growth in other products in the space.

The Australian ETP market rebounded strongly in the Junequarter, recording the second highest annual net flows with $4.4billion.

Of these flows, equities recorded the most with $2.1 billion,followed by commodities which were driven by the purchase of goldETPs.

Commodities ETPs doubled their share of the market in the past12 months from 2.2% to 4.5%.

The ETFs Physical Gold SP (Structured Product) grew 150% in the12 months to June to $1.8 billion to become the 7th largest ETP inthe Australian market.

Infographic - Australian ESG Exchange traded products
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