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Gold ETF investment remains moribund

While ESG attracts half of all inflows


Pete Carvill

The amount of money invested in gold ETFs has fallen in the past year, while that flowing towards ESG ETF funds has risen to more than 50% for the first time, according to the statistics and reports from the World Gold Council (WGC) and TrackInsight.

The WGC, an organisation representing the sector, released its Gold Demand Trends Q2 2021 at the end of last month. The authors of that report wrote: “Modest Q2 inflows into gold-backed ETFs (40.7 tonnes) only partly offset the heavy outflows from Q1; consequently, ETFs saw H1 net outflows (of 129.3 tonnes) for the first time since 2014.”

Inflows, according to the council, were highest in Western markets, led by the US, Germany, and France.

Louise Street, senior markets analyst at the WGC, said that investment was a more complex picture, compared to the returning consumer demand for the commodity. She added: “Despite evidence of strategic buying from both individuals and institutions, tactical investors had a more-mixed impact in the first half of the year. This was partly seen through gold ETFs where inflows in the second quarter only slightly dampened the effects of the preceding quarter’s sell-off.”

Climate concern

Conversely, Trackinsight found that over half of flows over 2021 had gone into ESG funds. The organisation found that the European ETF market has had $130bn of inflows this year, with 96 ETF launches. Of the $130bn worth of inflows, $65.6bn—or 50.4%–had been directed towards ESG funds.

Globally, these funds now have $325bn of assets under management, with $100bn of flows this year. Last year, said Trackinsight, ESG ETF flows were $88.5bn.

Ailing Zhang, ESG ETF analyst at Trackinsight, said: “The impact of the climate crisis is obvious to all eyes that can see. The current wildfires in Turkey, Italy, and Greece have not only caught our attention, but are also a vivid illustration of the importance of change. However, these latest numbers are cause for hope and indicate that we’re witnessing an historic shift in the mentality of European investors who are now putting sustainability at the heart of their investment decisions.”