Net inflows into UBS ETFs this year were only in ESG funds

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All of the net inflows collected by UBS exchange-traded funds this year are destined for sustainable products, while its other ETFs have seen overall net outflows.

UBS Asset Management said its sustainable product line was “really where the growth is,” adding that the sales trend has been driven by switching from other funds as well as new money.

The asset manager has attracted $ 9.8 billion in net inflows to its European ETFs in the year to date, including 10.2 billion in net inflows into sustainable investment products.

Clemens Reuter, Global Head of ETFs at UBS AM, said that while the company had “definitely expanded” its ETF assets, clients “were also shifting from mandates to sustainable mandates.”

This article was previously published by Ignites Europe, a title owned by the FT group.

Reuter said UBS has benefited from its wide range of sustainable ETFs, which offer a variety of “shades of green”.

This year, UBS launched 17 sustainable ETFs, including a range with benchmarks aligned with Paris.

“Light Green” products include the $ 2.2 billion UBS S&P 500 ESG ETF. So-called dark green ETFs include those that only track companies with the best environmental, social and governance scores.

Reuter said the dark green funds, those classified under Article Nine of the EU’s Financial Disclosure Regulation, had “not yet taken off,” but he expected demand to increase in the future. 2022.

When the company launched its first socially responsible ETFs 10 years ago, there were “internal questions” about the initiative, but the decision to do so had “paid off very well,” said Reuter.

Sustainable fund inflows helped push UBS’s ETF business above $ 100 billion in assets globally, with the bulk of these products domiciled in Europe.

Reuters expects demand for durable products to continue for at least the next 18 months.

The shift to sustainable products has been more evident at UBS than at other major European ETF providers this year.

In none of the other eight largest ETFs, does aggregate flows to sustainable products outweigh flows to other products to the extent seen at UBS, according to Morningstar data. Each of these eight companies manages more than € 50 billion in ETFs, together representing almost 90% of the sector’s assets.

At iShares, DWS, Vanguard, Lyxor and Invesco, inflows in unsustainable ETFs are larger than for sustainable products so far this year. Amundi and State Street Global Advisors are reversing this trend, although both companies have aggregate net inflows to both sustainable and non-sustainable ETFs, unlike UBS.

Across all European ETFs, sustainable products generated more than 40% of net flows in the first 10 months of the year, according to provisional data from Morningstar.

Strong demand for ESG ETFs has emerged despite passive products facing more challenges than actively managed funds to adapt to sustainable investing.

For example, if passive funds change the benchmark they follow in order to be classified in Article Eight of the SFDR, they may be considered a different investment proposal, introducing the risk of customers are withdrawing.

* Ignites Europe is a news service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at igniteseurope.com.

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