Investors around the world have been pumping money into climate-themed funds at an extraordinary pace lately. Citing a report from Morningstar, InvestmentNews is reporting that in the U.S., climate mutual funds and ETFs reached $31 billion in assets at the end of 2021, up 45% from the roughly $22 billion the year before.
Meanwhile, those funds received $13 billion in investor inflows in 2021, up 43% from 2020. More than half of that money, $7.2 billion, went into clean energy and tech funds, which account for the largest share of total assets, at $18.8 billion, or 61% of the climate fund category. Globally, 860 climate funds had $408 billion in assets under management at the end of 2021, which was about double the AUM from the previous year.
With Earth Day upon us and the demand for climate-related funds rapidly growing, investors may want to consider one of the three environmental, social and governance ETFs that Avantis Investors launched in March.
The Avantis Responsible U.S. Equity ETF (AVSU) invests in a broad set of U.S. companies across all market capitalizations and is designed to increase expected returns by overweighting securities that the firm believes to be trading at lower valuations and with higher profitability ratios, according to the firm. AVSU has an expense ratio of 0.15%.
The Avantis Responsible International Equity ETF (AVSD), meanwhile, invests in non-U.S. developed countries across all market capitalizations and, similarly to AVSU, is designed to increase expected returns by overweighting securities that the firm believes to be trading at lower valuations with higher profitability ratios. AVSD has an expense ratio of 0.23%.
Finally, the Avantis Responsible Emerging Markets Equity ETF (AVSE) invests primarily in a diverse group of non-U.S. companies across countries, market sectors, and industry groups, and may invest in companies of all market capitalizations. The portfolio management team limits its investable universe of companies by screening out those that raise concerns based on the team’s evaluation of multiple ESG metrics. AVSE has an expense ratio of 0.33%.
The three responsible ETFs apply the financial science-based approach used across all of Avantis’ investment strategies together with ESG considerations to create well-diversified portfolios that can help investors achieve their investment goals. Each fund takes a proprietary systematic investment approach that combines the latest in financial science with common sense investment principles.
In the press release announcing these funds, Avantis chief investment officer Eduardo Repetto says that the firm has “priced these strategies in line with our conventional equity ETFs because we think that investors hoping to incorporate their ESG considerations into their investment portfolios should not have to endure higher fees.”
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