Visualizing the Sustainable ETF Universe
Visualizing the Sustainable ETF Universe
Globally, sustainable exchange-traded fund (ETF) assets hit $150 billion last year, vaulting 25 times higher than in 2015.
Yet despite this growth, sustainable ETFs—baskets of investments that focus on environmental, social and governance issues—account for roughly 5% of the entire ETF universe. What makes up this rapidly growing market? Where are the most common areas for investment?
To answer this question, this infographic from MSCI breaks down the sustainable ETF universe.
Sustainable ETFs: An Overview
By and large, the scope of sustainable ETFs can vary. One sustainable ETF may consist of clean tech companies, and another could focus on sustainable leaders in the S&P 500. Like the broader ETF market, they typically offer low fees.
Overall, the sustainable ETF universe can be broken down into four types of assets.
| ETF Asset Class | Global Number of ETFs | Share of Total |
|---|---|---|
| Equity | 331 | 80.7% |
| Bond | 69 | 16.8% |
| Mixed Assets | 8 | 2.0% |
| Alternative | 2 | 0.5% |
As of Dec. 31, 2020
Source: MSCI LLC ESG Research (Feb, 2021)
Unsurprisingly, the majority of sustainable ETFs are equity ETFs, comprising 81% of the market as of Dec. 31, 2020.
Following equity ETFs are bond ETFs, at nearly 17% of the total universe. One growing subset, known as green bonds, fund environmental projects such as water management and green buildings. Here, debt issuers generate fixed income for investors that target climate objectives.
Meanwhile, there are just eight funds globally, or about 2% of sustainable ETFs, that combine more than one type (Read more...)