The Australian ESG ETF market is set to get crowded in 2020, with State Street Global Advisors (SSGA) set to list an ETF on the ASX while BlackRock is also strongly considering the possibility.
According to industry sources, SSGA is putting the final touches on its global shares ESG ETF. The fund, which will begin trading on the ASX in the near future, will track an index from S&P Global.
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While precise details were unavailable, it is believed that the ESG screen will be on the lighter side and the fund will be market weighted. The new fund will be priced in line with SSGA’s other ASX-listed global shares ETF, ETF Stream understands.
It will be SSGA’s first new ETF in Australia in almost five years.
BlackRock has not formally committed to developing ESG ETFs in Australia. Publicly, the company has said only that they are “considering” the possibility.
However, the strong growth in assets under management in ESG ETFs in Australia, together with BlackRock’s chief executive Larry Fink’s public commitment to ESG, suggests a listing is very possible.
Sources contacted widely expected BlackRock to launch an ESG ETF – and perhaps more than one – later in the year.
TickerFund NameAUM ($M)FAIRBetaShares Australian Sustainability Leaders ETF528.0ETHIBetaShares Global Sustainability Leaders ETF668.3GRNVVanEck Vectors MSCI Australian Sustainable Equity ETF55.5ESGIVanEck Vectors MSCI International Sustainable Equity ETF35.7VESGVanguard Ethically Conscious International Shares Index ETF104.8VEFIVanguard Ethically Conscious Global Aggregate Bond Index Hedged ETF17.2
Australia's large middle-class left
ESG ETFs are relatively new in Australia, and take up only around 2% of the industry's total AUM.
However, the funds command higher margins for ETF providers meaning that – from a revenue perspective – they make up more of the industry than the headline AUM figures suggest. They have additional advantages for ETF providers in that they can be sliced and diced to cater to different markets – meaning they cannot be commoditised in the same way that other index funds can.
A final benefit for ESG ETFs has been their ability to generate media attention.
Putting things into perspective: REIT ETFs in Australia have almost 40% more assets under management than ESG ETFs. Yet REIT funds have received a tiny fraction of the media coverage.
TickerFund NameAUM ($M)VAPVanguard Australian Property Securities Index ETF1,388.5MVAVanEck Vectors Australian Property ETF221.7DJRESPDR Dow Jones Global Real Estate Fund294.6REITVaneck Vectors FTSE International Property Hedged ETF40.5
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