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Vanguard, Aus Ethical dominate sustainable market

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Vanguard and Australian Ethical each account for around a fifth of the assets invested in Australian sustainable funds, with the US index giant only taking four years to match the local specialist’s market share.

A report on sustainable investing across Australian funds from Morningstar has estimated flows for the third quarter into the segment were $1.1 billion, following muted flows in the prior quarter.

Retail assets invested in sustainable investments rose by 30 per cent year-on-year in the September quarter, to $22 billion.

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The Australian sustainable funds market however remains concentrated, with the top 15 funds accounting for 52 per cent of total assets in the sustainable fund universe. 

At the fund level, two asset managers, Australian Ethical (19 per cent) and Vanguard (19 per cent) account for 38 per cent of all Australasian sustainable fund assets on the Morningstar database. 

While it has taken Australian Ethical 30 years to gain its market share, Vanguard launched the first of its sustainable fund strategies in 2016, matching the Australian provider in less than four years. 

AMP and Dimensional were the next largest providers, each with 5 per cent of Australasian sustainable fund assets. 

Meanwhile, two ETFs from BetaShares – BetaShares Global Sustainability Leaders and BetaShares Australian Sustainability Leaders – received a combined 27 per cent of the third quarter inflows. 

The research has identified 123 Australasia-domiciled sustainable investments, with 87 funds employing some form of exclusion from controversial areas. The sustainable product total compared to 108 funds at the end of the first quarter.

Inflows during the September quarter were split roughly evenly between active (US$393 million) and passive (US$422 million) strategies.

The majority (61 per cent) of sustainable funds placed in the top half of their respective Morningstar category peer groups during the year to 30 September. 

Meanwhile, global inflows into sustainable funds were up by 14 per cent year-on-year in the September quarter, to US$80.5 billion. 

Assets in sustainable funds hit a high of US$1.2 trillion at the end of September. 

Global product development also topped previous numbers, with 166 new offerings, including 38 in countries outside of Europe and the US, double that in the second quarter.

 

Vanguard, Aus Ethical dominate sustainable market
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on [email protected].au.

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