(Bloomberg) -- A long-held truism of ESG is being challenged, namely the idea that the strategy is best-suited to active fund management.Most Read from...
-- A long-held truism of ESG is being challenged, namely the idea that the strategy is best-suited to active fund management .HSBC CEO Quinn Unexpectedly Steps Down After Almost 5 YearsFor 11 of the past 12 quarters, clients have redeemed cash from actively managed funds registered as “promoting” environmental, social and governance goals, otherwise known as Article 8 under European Union regulations. The data, provided by Morningstar Inc.
Meanwhile, Morningstar’s global ESG fund management study — published last week — also shows passive strategies gaining ground. And the world’s uncontested leader in ESG products is BlackRock Inc., “thanks to its passive offering,” according to Morningstar. At the same time, actively managed funds saw a third consecutive quarter of outflows globally, the researcher said.The biggest Article 9 product at the end of the first quarter was the Handelsbanken Global Index Criteria , a $10.
The EU’s Sustainable Finance Disclosure Regulation, which defines what can be categorized as Article 6, 8 or 9, came into force in March 2021. SFDR is currently under review following widespread criticism from market participants and national regulators alike, who have complained of confusing language and inadequate definitions. It may take years before a revised regulation is unveiled.
A separate analysis by Bloomberg Intelligence, which looks at a wider fund universe than Morningstar, puts the total market of SFDR-registered products at $13 trillion.“Passive Article 9 funds offer the lowest fees across all SFDR funds strategies including Article 6 — the dark fund category 0.17 bps is more than 20% cheaper than Article 8 and Article 6 — yet not helping dark green trackers gain assets.
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