Three years ago ETP products incorporating Environmental, Social and Corporate Governance principles represented 1% of theAustralian market. Following rapid growth and some impressive performance, that proportion tripled to 3% of the market, or $1.8 billion as at June 2020.
Since June 2017 the Australian ETP market has grown 31% p.a. from $29.3 billion to $65.6 billion in FUM as at 30 June 2020.
In the same time period ESG products grew 76% p.a. from $325 million to $1.8 billion.
Of the nine ESG ETP products, eight are ETFs and one is a managed fund which is actively managed.
Four invest in Australian equities, three invest in international equities and two invest in fixed interest.
The dominant player in the ETP ESG space is BetaShares with 73% of FUM, 71% of the 12 month net funds flow and 72% of the 12 month revenue.
"ESG is an investment theme that keeps giving. There is clearly a thirst on the part of investors to align themselves with companies that are good for society, or at least are not overtly bad," said John Dyall, head of investment research at Rainmaker.
The BetaShares Global Sustainability Leaders ETF is the largest product in the space with $705 million in FUM as at 30 June 2020.
This is followed by the BetaShares Australian Sustainability Leaders ETF and the Russell Australian Responsible Investment ETF.
These products manage $536.7 million and $224.5 million in FUM respectively (as at 30 June 2020).
The Australian ESG ETP market experienced a mixed 12 months to June 2020, with the withdrawal of UBS Asset Management from the market in May 2020 dropping the number of ESG ETP products fall 40% from 15 to nine. However this contraction was countered by the rapid growth in other products in the space.
The Australian ETP market rebounded strongly in the June quarter, recording the second highest annual net flows with $4.4 billion.
Of these flows, equities recorded the most with $2.1 billion, followed by commodities which were driven by the purchase of gold ETPs.
Commodities ETPs doubled their share of the market in the past 12 months from 2.2% to 4.5%.
The ETFs Physical Gold SP (Structured Product) grew 150% in the 12 months to June to $1.8 billion to become the 7th largest ETP in the Australian market.
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Total risk market inflows were down a marginal 0.6% over the year to June 2024, decreasing from $18.3 billion to $18.2 billion.
Dual access ETPs, which are transacted both on stock exchanges and off-market through funds managers, can cost four times as much as the rest of the Australian ETP market.
