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Number of ESG funds jumps 89% in a year

But costs are creeping up as more existing funds reposition their offering


Pete Carvill

Research firm Fitz Partners claims that the number of fund products labelled as ‘ESG’ grew by nearly 90% in Europe last year.

The firm compared the management fees of the clean share classes of ESG labelled funds in Europe. The research is based on a universe of over 4,000 clean share classes for equity and bond cross-border funds covering a total of $500bn in assets.

It found that the number of cross-border ESG labelled equity and bond products has increased by 89% compared with the previous year.

Hugues Gillibert, CEO of Fitz Partners, said: “For a few years now, new launches of ESG labelled funds has weighted significantly in the universe of ESG funds and have kept management fees lower on average than non-ESG fund products in Europe. In the past year a fair share of the increase in ESG labelled funds has come from the repositioning of existing funds as ESG products.”

He added: “Unlike new fund launches, these funds new to the ESG universe have not altered their pricing while transitioning to ESG and have inflated the overall ESG funds costs.”

On average, the cost for ESG labelled equity funds stands at 0.78%, while the corresponding fees for non-ESG remain higher at 0.80%. For ESG-labelled bond funds, the clean management fee average is 0.5%, while non-ESG fees also remain higher at 0.53%.

The firm referred to similar research from a year ago. It said that average fees then for ESG labelled equity and bond funds were showing lower averages at 0.76% and 0.46% respectively. Fitz Partners say that isolated clean classes which were in existence 12 months ago and were not labelled as ESG have since been repositioned or labelled as ESG in the last year.

It said that these newly-labelled share classes still show an average clean management fee in line with current non-ESG funds at 0.80% and 0.55% for equity and bond funds respectively.