More ‘ESG’ funds folding this year, but others are taking their place

investmentnews.com:

A handful of asset managers have been pulling the plug on ESG-themed funds they launched several years ago — a result they all but certainly knew was coming, as not every attempt to get a slice of that booming market was going to work.

That hardly means that sustainable investing is on the decline. The number of products continues to grow, as do the total assets in them. But fund companies might have to do more to stand out, whether that means offering unique investments or showing that their strategies are genuine ones in a field rife with claims of greenwashing.

So far this year, firms have shuttered 26 “sustainable” mutual funds and ETFs in the U.S., a rate roughly three times that seen during the first eight months of the prior three years, according to Morningstar Direct data recently cited by Bloomberg. Shops closing products included BlackRock, State Street, Columbia Threadneedle, Janus Henderson and Hartford Funds, the publication noted.

While those closures followed mounting pressure from Republican groups to abandon ESG considerations, they are not necessarily any indication that asset managers are stepping back from sustainable funds.

On Wednesday, BlackRock’s iShares filed with the Securities and Exchange Commission for a new ETF that would invest in large- and mid-cap international stocks to build a Paris Agreement-aligned portfolio, meaning that the holdings would reflect climate-change goals of limiting global warming to less than 2 degrees C this century. Days before, the company had filed for an iShares Energy Storage & Materials ETF, which would invest in companies focused on the transition to a low-carbon economy.

This week, BlackRock also launched its Climate Transition-Oriented Private Debt Fund,