Lack of innovation in fixed income ESG ETFs leaves European investors cold
New research from specialist fixed income ETF provider Tabula Investment Management has revealed that European professional investors want to see more innovation in fixed income ESG ETFs.
Tabula has recently signed the UN-supported Principles of Responsible Investment and is keen to understand and incorporate the views of investors as it implements those principles.
The company's research found that 96% of investors surveyed are already using ESG ETFs, something that Tabula CEO Michael Lytle calls "a remarkable level of penetration in only a few years".
"However, in fixed income specifically, the vast majority of respondents want to see more innovation, broader coverage of exposures and more transparency around the effect of the fund's approach," he said
Exclusion
Specific features that professional investors look for in ESG ETFs include calls for the exclusion of the most harmful companies by over 70% of respondents.
The survey also revealed an preference for out-performance potential over benchmark tracking.
"The exclusion of certain companies - for example, those violating the UN Global Compact or manufacturing controversial weapons - is becoming a minimum requirement," said Lytle. "This is a great starting point but not the whole story.
"Many existing ESG ETFs are designed to closely track traditional benchmark indices. However, 75% of our respondents saw out-performance potential as important, compared to 25% preferring to minimise tracking error.
Performance
Lytle points that'll this could indicate that investors are now seeing ESG as a driver of long-term performance, not just a qualitative overlay. This ties in with strong demand (63% of respondents) for more targeted products focused on issues like climate change and diversity, he added
"Responsible investing is evolving rapidly," said Lytle. "This research gives us valuable insights into the broad trends and, crucially, the different views and priorities across countries and investor types. Creating innovative ESG ETFs that meet investor needs is a challenge for providers and one that Tabula is actively embracing."
by Tanya at http://www.ifajobs.net
Daniel van Niekerk
Welcome to Prestige IFA Jobs, the premier international wealth management recruitment service. Since our establishment in 2016, we have earned a reputation as the go-to choice for discerning international wealth management and investment advisory firms around the world. At Prestige IFA Jobs, we redefine the art of headhunting in our industry. We stand unrivaled, leading the way with our unique approach and unmatched expertise. No one does what we do quite like us. Our commitment goes beyond simply matching a qualified candidate with a good IFA firm. We believe in finding the perfect synergy between candidate and company. With our extensive background in personal financial advisory across multiple countries, we take the time to deeply understand our candidates and our clients. So, when things go wrong, don't go wrong with them...because the successful warrior is the average man, but with laser focus.
