Exchange traded funds that embrace ESG strategies are seeing an enormous flow of new assets, according to specialist ETF data platform TrackInsight, which issued its January numbers today. ESG ETFs nearly tripled their assets last year and continued their growth in January, adding another $20bn to reach a new high of $194bn in assets under management.
This represents the 10th consecutive month of growth for ESG ETFs and is a record high for this part of the ETF universe. TrackInsight said $15.7bn came from new assets making January the largest single month on record in terms of historic flows into ESG ETFs.
In contrast, the entire European ETF industry registered growth of $23bn over January, with $17.25bn of new flows. Delivering a monthly growth rate of just 1.8%, European listed ETFs lagged the North American market which grew 2.9% reaching $5.82trn.
“ETFs entered 2020 with incredible momentum and this doesn’t appear to be slowing down,” said Anaelle Ubaldino, Head of ETF Research and Investment Advisory at TrackInsight. “Investors have added over $90bn of new money to ETFs over January and, incredibly nearly 20% of that has been directed towards ESG strategies. Research from TrackInsight indicates that almost half of institutional investors plan increase their allocation to ESG ETFs this year and so for issuers, competing in ETFs will increasingly be about competing effectively in ESG.”
Active ETFs continue massive growth trend
The other big sub-theme within the ETF universe in 2020 and in January was actively managed ETFs. They succeeded in gathering assets at a trend-busting pace, growing by 6.3% over January. Over $13bn of new flows contributed to the segment reaching a new record of $293bnn in AuM (assets under management).
It is also noteworthy that cannabis ETFs – those tracking an index of stocks composed of companies active in the cannabis sector – had another good outing in January. Cannabis ETFs occupied five of the top 10 slots in terms of performance in January TrackInsight said. The leaders were the Global X Cannabis ETF from Global X (up 42.64% in January in USD terms) and the Horizons Marijuana Life Sciences Index ETF (from Horizons ETFs) which chalked up +41.48% in January.
Other leading cannabis ETFs included The Cannabis ETF (+33.95% January) and ETFMG Alternative Harvest (+££.02%). That’s some fairly spectacular numbers from stocks in the cannabis sector, showing just how hot it is becoming as investors anticipate massive and far-reaching liberalisation of the US cannabis market.
Among the thematic ETFs, special mention should also go to the SPDR S&P Retail ETF, which registered a gain of +36.94% in January, and ETFMG Video Game Tech which climbed +35.69% during the same time period.