Survey shows waning interest in ESG funds

Survey shows waning interest in ESG fundsInvestors across Asia have become more sceptical about the credibility and performance of ESG funds, according to recently released research. The survey commissioned by AXA Investment Managers showed that investors’ doubt about the performance of ESG funds has increased and is now the main barrier to allocating assets to these funds. More than a third (35%) expressed doubt in 2023, compared to 27% in 2021.  Similarly, the number of investors who expected ESG funds to outperform funds with the same level of risk fell by 10 percentage points to 41% in 2023. “There is a lack of clarity over ESG funds being genuinely more sustainable,” stated the report. “Across Asia, investor awareness and understanding of their ESG product holdings are on the decline.” In Singapore, the number of investors holding ESG funds has decreased over the same period, from 38% in 2021 to 36% in 2023. Furthermore, those investors are also allocating a smaller proportion of their portfolio to sustainable funds. Just over a quarter (28%) of investors are allocating more than 40% of their portfolio to ESG funds, compared to 37% in 2021. According to AXA IM, investors need to be made more aware of the intentions of ESG funds in order to breed more confidence in the asset class. “Strengthening trust and confidence in ESG assets will prove challenging unless investors acquire a deeper comprehension of the diverse ESG products and solutions, their specific goals, and an understanding of the underlying mechanisms,” said Jane Wadia, head of sustainability at AXA IM. The survey was carried out by research firm Cicero in October 2023 and interviewed 12,000 consumers across Asia and Europe. © 2024 funds global asia

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