Exchange traded fund provider Lyxor ETF announced the release of its latest Money Monitor report, tracking flows in European open-ended funds and ETFs. According to the new report, flows into European ESG-themed ETFs continue to maintain their strong performance, reaching a record breaking €3.9 billion in September.
According to the Lyxor ETF report, ESG ETF flows now represent more than half of total cumulative ETF flows in 2020, reaching €24.5 billion year-to-date, compared to total market flows of €43.8 billion.
The report points to an evolution into the type of ESG ETFs that are gaining traction. Equity ETFs have historically attracted the bulk of ESG ETF funds, representing approximately 80% of flows since January 2017. While equity flows remain strong, fixed income ESG ETFs have been gaining momentum, gathering €4.7 billion YTD to September, nearly twice the amount (€2.8 billion) over the same period last year. Fixed income flows are benefiting from the proliferation of green bond issuance, driven by investor demand for green assets, and by policymaker commitments to align with the Paris Agreement goals. Lyxor ETF notes a promising outlook for this market, driven in part by the EU’s ambitious green agenda under the European Green Deal investment plan, and the €750 billion post-COVID recovery fund, of which 30% is to be allocated to climate-friendly projects.