The list of ESG-screened ETFs:
|Fund name||Ticker||Total Expense Ratio|
|iShares MSCI World ESG Screened UCITS ETF||SAWD||20 bps|
|iShares MSCI Japan ESG Screened UCITS ETF||SAJP||20 bps|
|iShares MSCI Emerging Markets IMI ESG Screened UCITS ETF||SAEM||18 bps|
|iShares MSCI Europe ESG Screened UCITS ETF||SAEU||12 bps|
|iShares MSCI EMU ESG Screened UCITS ETF||SAUM||12 bps|
|iShares MSCI USA ESG Screened UCITS ETF||SASU||7 bps|
In addition to the newly added ESG range, the sustainable investing option also includes 8 Social Responsibility Investing (SRI) ETFs. If you Google "what is an SRI ETF?", a larger number of results include ESG in its definition. So it makes you think, "what's the difference between ESG and SRI?".
When Sorel was asked this question, he refers back to an assumption made in the article posted last week which calls SRI ETFs a more "extreme" version of ESG ETFs, for which he agreed with.
"SRI ETFs are constructed by keeping 25 per cent of the best ESG scored firms per sector and per region around the world. It is like factor investing in ESG, if you only keep 25 per cent of the market with the best scores, it's a high engagement to buy those funds", said Sorel. Therefore, the SRI removes 75 per cent of the companies whereas "ESG screened ETFs are more mainstream for those with corporate values and want to buy the same market exposure as a market cap index. Its bringing ESG mainstream for any investor."
SRI ETFs are for a smaller segment of the market whereas ESG ETFs are for anyone with corporate values, wanting to replace their core allocation. Sorel explains how iShares' clients are interested in whether their investments are bringing value to their portfolio as well as if they comply with their core values.
iShares anticipate more investors to incorporate ESG values in to their investments in the near future. Assets under management for ESG ETFs is currently $25bn, but the ETF provider is expecting this value to boom up to $400bn by 2028. This significantly large value is predicted as a result from the "growing demand, going from niche to mainstream and the growth of the ESG index market".
Sorel said how 40-50 per cent of every client meeting he has is discussing the topic of ESG. There is a growing demand for the product which is why the AUM is expected to continue rising. iShares will issue more ESG ETFs in the future as there are "still gaps in which the clients are demanding".