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Conventional Funds Add ESG-Related Disclosure as ESG Funds Draw Assets

More actively managed funds are including ESG criteria to their prospectus disclosure, Morningstar reports, possibly contributing to huge flows into the sector. Flows into sustainable funds have set calendar-year records for each of the past three years and appear headed for a fourth, the firm reports. According to Morningstar, sustainable funds attracted an estimated $8.9 billion in net flows in the first half of 2019, surpassing their $5.5 billion in flows for all of 2018. As of late 2014, there were about 130 sustainable open-end and ETFs available to U.S. investors, compared to the current 279. There are more than 200 funds that are not solely ESG-focused but that have formally added ESG criteria to their investment process, Morningstar reports. Some industry watchers have regarded these conventional funds’ ESG disclosures as simply marketing in response to booming demand. The Wall Street Journal also reports that ESG might be the one bright spot for beleaguered asset managers that are losing assets and seeking growth opportunities.Sustainable funds are also performing well in the current environment notes Morningstar expert John Hale.  Among the sustainable funds found in dozens of different Morningstar Categories, 63% finished in the top half of their Morningstar Categories last year and only 18% finished in the bottom quartile.

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