Hargreaves Lansdown has revealed that inflows into ESG products on its platform have increased 25-fold since 2016, with interest continuing to accelerate this year as clients have already committed double the amount to active and passive ESG funds in 2020 compared to last year.
According to the platform’s latest data release in time for Good Money Week, inflows into responsible funds since 2016 have increased a staggering 2,525%, hitting a fresh record.
Young investors have shown particular interest in ESG issues over this time frame, with net inflows into responsible funds from 18-29 year olds up 3,588% since 2016.
However, this year ESG has proved most popular with slightly older clients, with the highest demand coming from those aged 30-54, followed by retirees aged between 55 and 64, who have shown increasing interest in sustainability.
Most of the money, according to HL, is going into active ESG funds, which account for 93% of net inflows into responsible funds on the platform between 2016 and 2020, though passive ESG solutions have seen an increase in inflows of 109% this year.
The research also shows that two thirds of inflows into sustainable products come from male investors, while female buyers account for just 34% of sales.
Emma Wall (pictured), head of investment analysis at Hargreaves Lansdown, said: “It is fantastic to see that appetite for ESG investing has not waned this year despite significant market headwinds. HL clients have continued to buy ESG active and passive funds this year, up 100% already on 2019.
“We believe that investing with ESG considerations in mind is simply good risk management – professional and individual investors alike should be looking to fill their portfolios with companies that are sustainable; delivering sustainable revenues, profits and – where applicable – dividends.”
“It is also great to see our clients busting the myth that ethical investing is only of interest for millennials,” she added.
“Our data reveals that those investing for and in retirement are increasingly buying funds which have an ethical or ESG mandate. Investing in the companies that get ESG right should equal long-term positive returns – and long-term positive returns are good news for all investors, regardless of their age.”
So far this year, many of the ESG funds that have seen the most inflows have been products offered by large investment firms, such as Baillie Gifford, Aegon Asset Management (formerly Kames Capital) and Liontrust, while three Royal London funds have made it onto the most popular funds list (see below).
|Most popular ESG funds on the HL Platform 2020 (by total net flow, alphabetical order)
Baillie Gifford Global Stewardship
FP WHEB Sustainability
Fundsmith Sustainable Equity
Kames Ethical Equity Fund
Liontrust SF Global Growth
Rathbone Ethical Bond
Royal London Sustainable Diversified Trust
Royal London Sustainable Leaders
Royal London Sustainable World
VT Gravis Clean Energy Income
Source: Hargreaves Lansdown. Data correct as of 22/10/2020