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Seven new sustainable funds added in August

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Bottom Line: Investors gained five thematic funds with a key focus on the environment and decarbonization, but other more seasoned lower cost options are available.

Summary and observations

Seven new sustainable investment funds¹, including five actively managed ETFs and two mutual funds were launched in August and at least 29 new sustainable ETFs as well as mutual funds were registered with the SEC during the same month. Investors gained five thematic funds with a key focus on the environment and decarbonization. The other two newly launched funds employ an ESG integration approach to investing that emphasizes minimum ESG thresholds. Refer to Table 1. The new funds are small in size, averaging $3.7 million in net assets and ranging from $0 to $10.2 million for the Hartford Schroders ESG US Equity ETF that likely includes at this stage some of the sponsor’s seed money. Further, the funds, with one exception, are offered to investors at higher than mean level expense ratios². The one exception is the Hartford Schroders ESG US Equity ETF that charges 39 bps. Given that other more seasoned lower cost options are available, for now, investors are directed to consider alternative currently available investment opportunities.

Sustainable funds added $14.3 billion in net assets

On a combined basis, sustainable funds, a total of 1,067 mutual funds and ETFs according to Morningstar, added $14.3 billion in net assets during the month, to end August with $348.4 billion in assets. Of the sum added in August, $8.2 billion is sourced to mutual funds that ended the month with $236.3 billion. The remainder, or $6.1 billion, is attributable to sustainable ETFs that closed the month at $112.1 billion, or 32.2% of the total.

Almost two-thirds of the net assets gain by ETFs in August was achieved by five funds that gained $3.8 billion.

The top five mutual funds accounted for a combined net assets gain in the amount of $2.9 billion, or 35% of the net increase achieved by mutual funds. At the same time, the largest five withdrawals from mutual funds reached $120.3 million. Refer to Table 2. On the other hand, the uptake in ETF assets was more concentrated as almost two-thirds of the gain in August was achieved by five ETFs that attracted a net total of $3.8 billion. The five largest drawdowns deducted $549.8 million. Refer to Table 3.

Sustainable mutual funds and ETFs across all asset classes posted an average total return gain of 1.9%

Sustainable mutual funds and ETFs across all asset classes, a universe of 1,069 funds, gained an average 1.9% with results ranging from a high of 22.52% recorded by the newly launched $10.2 million Viridi Clean Energy Crypto-Mining and Semiconductor ETF to a low of -4.24% posted by Krane UBS China A Shares Fund I. Mutual funds posted an average gain of 1.93% while ETFs scored a slightly higher average gain of 2.22%.

29 registrations filed with the SEC in August

As noted above, more funds are slated for launch in the coming months, based on SEC registrations during the month of August alone. Of 29 registrations, 15 involved new ETF launches, including funds to be offered by BlackRock, Federated Hermes, Invesco, and JP Morgan and State Street Global, to mention just a few. In addition, 14 new sustainable mutual funds were also registered with the SEC, to be launched by firms such as BlackRock, Columbia, Eaton Vance, Goldman Sachs and RBC.

Table 1: Newly launched sustainable investment funds and their sustainable investing approaches
Fund Name/ManagerMutual fund/ETFAUM($ MM)Expense Ratio (bps)Sustainable Investing Apporach
BlackRock Future Climate and Sustainable Economy ETFBFAETF-Active5.170Thematic fund, focusing on low carbon economy.  Fund combines ESG integration, exclusions and engagement practices.  
Hartford Schroders ESG US Equity ETFHartford Funds Management Company, LLC sub-advised by Schroder Investment Management North America and Schroder Investment Management North America LimitedETF-Active10.239ESG integration anchored by minimum ESG thresholds, combined with exclusions.
Nuveen Winslow Large-Cap Growth ESG ETFNuveen Fund Advisors, LLC, sub advised by Winslow Capital Management, LLCETF-Active^5.264ESG integration with ESG scores that must meet minimum ESG standards combined with engagement in some cases as well as exclusions.  
Ninety One Global Environment INinety One North America, Inc.
MF-Active090Thematic with a focus on companies that contribute to positively to environmental change.  
Regnan Global Equity Impact JOHCM (USA) Inc. (the “Adviser”).MF-Active 289Thematic with a focus on companies that have the potential to contribute to the world’s major social and environmental challenges.  
Spear Alpha ETFSpear Advisors LLCETF-Active2.175Thematic with a focus on companies poised to benefit from breakthrough innovation in industrial technologies, including a focus on companies with an environmental focus and decarbonization.  ESG is factored into decision making.   
Virtus Duff & Phelps Clean Energy ETFVirtus ETF Advisers LLC, sub-advised by Duff & Phelps Investment Management Co. ETF-Active1.359Thematic with a focus on clean energy.  
Notes of Explanation: ^ ETF will publish on their website each day a proxy portfolio rather than the actual portfolio. Sources: Morningstar Direct for AUM and expense ratios; Sustainable Research and Analysis for sustainable investing practices.
Table 2: EFT and Mutual Funds: August 2021 top five funds experiencing greatest net additions
ETF NameAUM ($)Net AdditionsMutual Fund NameAUM ($)Net Additions
iShares ESG Aware MSCI USA ETF22,884,931,0852,183,429,719Parnassus Core Equity31,013,702,7731,253,758,014
Xtrackers EM CarbReduc & ClimtImprvs ETF496,269,344486,356,854Vanguard FTSE Social Index15,202,986,173727,621,524
iShares MSCI USA ESG Select ETF3,966,684,051415,810,328Brown Advisory Sustainable Growth6,533,818,476455,261,168
Vanguard ESG US Stock ETF5,248,813,500359,336,217DFA US Sustainability Core 15,412,846,745230,214,190
iShares ESG Aware MSCI EAFE ETF6,662,682,037350,103,758Parnassus Endeavor5,252,344,844206,791,142
Totals
3,795,036,876

2,873,646,038
Notes of Explanation: Mutual fund AUM combines all share classes as is the case for fund additions and withdrawals. Source: Morningstar Direct
Table 3: EFT and Mutual Funds: August 2021 top five fund with the greatest net withdrawals


AUM ($)Net WithdrawalsMutual Fund NameAUM ($)Net Withdrawals
ALPS Clean Energy ETF941,051,611(20,657,766)Appleseed Investor108,508,808(6,426,258)
Invesco Wilder Hill Clean Energy ETF1,878,440,759(36,876,104)JPMorgan Small Cap Sustainable Ldrs 333,761,503(7,671,475)
Invesco Solar ETF3,211,858,112(138,650,094)Eventide Limited-Term Bond 176,012,691(12,859,681)
iShares ESG Aware MSCI EM ETF7,107,035,970(149,616,375)AMG GW&K ESG Bond893,019,337(29,906,850)
WisdomTree Emerging Mkts ex-State-Owned Enterprises ETF4,573,289,602(203,969,499)UBS International Sustainable Equity373,255,557(63,389,531)
Totals
549,769,838

120,253,795
Notes of Explanation: Mutual fund AUM combines all share classes as is the case for fund additions and withdrawals. Source: Morningstar Direct
¹ New sustainable mutual funds and ETFs based sourced to Morningstar Direct, based on Morningstar’s definitions, with new share class launches excluded. Fund registrations sourced to EDGAR filings as compiled by Sustainable Research and Analysis based on the following sustainable investing definition: While definitions continue to evolve, sustainable investing refers to a range of five overarching investing approaches or strategies that encompass: values-based investing, negative screening (exclusions), thematic investing, impact investing and ESG integration, in turn, classified into ESG Integration, ESG Integration-Consideration and ESG Integration-Mixed, referring to a core strategy consisting of ESG integration, but exclusions, impact or thematic approaches may also be employed. Shareholder/bondholder engagement and proxy voting may also be employed along with one of more of these strategies that are not mutually exclusive.
² Expense ratio data analyzed separately for sustainable ETFs and mutual funds in existence at the end of August, a total of 1,069 funds. Active and passively managed funds have been combined for purposes of this analysis.
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