After a record year for interest in sustainable investing strategies, fund managers are already adding to their ranges and planning further developments to meet client demand.
More than $250 billion of new investments were added to ESG and SRI funds in 2020 according to Bank of America.
To capitalize on the continued high interest from investors, managers including T Rowe Price, PGIM, AllianceBernstein and DWS have begun work on new offerings coming to market this year.
T Rowe Price is to launch its first sustainability-themed investment fund in the first quarter of this year. The T Rowe Price Global Impact Equity fund (TPGEX) will target companies that contribute to one of the strategy’s “impact pillars” – climate and resources, social and quality of life, and sustainable innovation and technology.
The fund has an expense ratio of 0.69%, according to a prospectus filed with the Securities and Exchange Commission earlier this month, and it will be managed by a nine-person investment advisory committee.
The fund management giant has already announced plans to roll out news ESG requirements for more than 50 products available to US investors.
Separately, PGIM has launched Quant Select, a customizable platform for registered investment advisors to help them invest according to ESG principles on behalf of their clients.
Run by PGIM’s quantitative investment specialist QMA, the service offers active multi-factor investing, tax management, and custom ESG “solutions”.
Other major asset managers are planning on expanding their ESG and SRI offerings this year.
AllianceBernstein (AB) – which already runs more than $16.5 billion in dedicated ESG assets – is developing further products in this area, according to its CEO Seth Bernstein.
During the company’s fourth quarter results call on February 11, Bernstein said clients were particularly interested in thematic strategies across global, US and municipal sectors.
In an interview with Barron’s published on February 2, DWS chief executive Asoka Woehrmann said he planned for every new product launched this year to be ESG-themed.
“Sustainability is more than a corporate topic, it’s a society topic and an industry topic,” Woehrmann told the business publication. “Starting in 2021, all the new product initiatives will by default be ESG.”
Several recent reports have suggested that 2021 could break records for subsectors of the ESG investment universe.
Fixed income manager Insight Investment found that impact bonds raised $500 billion in 2020 and this could be “easily repeated” this year. Nordic bank SEB has forecast the green bond market to raise $500 billion this year.