Luxembourg has 28% responsible investing fund share
The European Responsible Investing Fund Survey published by ALFI, the Association of the Luxembourg Fund Industry, suggests that close to a third, 28%, of the 1,236 products identified are domiciled in the country.
These funds total assets under management of €129.49bn, which compares favourably with the €5.5bn under management in specific microfinance vehicles worldwide, ALFI said.
Responsible Investment (RI) assets account for about 1.6% of the European investment fund market, and 2.3% in terms of number of funds.
Other findings include:
– Cross-sectoral “ESG” (Environment, Social and Governance) funds, are by far the largest sub-categories of funds with a combined total of 704 funds, more than half of the total number of RI funds identified. Those funds invest in multiple sectors, but use filters or screens to select their investments. They either use negative screening (e.g. no investments in companies which employ child labour) or positive screening (e.g. investments only in companies with an ESG policy in place).
– When it comes to a particular investment theme, asset managers tend to favour environmental themes. Climate change/renewable energies, environmental/ecological, carbon and water are the four largest thematic sub-categories in terms of assets under management, totalling €30.49bn.
– With a market share of 28% of RI funds, Luxembourg is the largest overall as domicile in terms of number of funds. France and Luxembourg together occupy a 45% market share. Luxembourg is the second largest domicile in assets.
– Social Impact funds, which focus on one or various impact areas, are emerging from the bottom of the list, but the concept of social impact is still blurred and overlaps with other themes.
– The boundary between microfinance funds and social impact funds is grey and open to debate. Lack of reliable and accurate data still constitutes a barrier to evaluate the real size and potential of this new market.
– The 42 funds identified as Sharia-compliant funds, account for €0.94bn.
Marc Saluzzi, chairman of ALFI, said: “ALFI commissioned this study because we believe that responsible investing is not a sector that will come and go in fashion, but it is the start of a tectonic shift that will ultimately create a new landscape and set new norms for the industry. The findings have born out this belief, with the majority of responsible investment professionals confirming that there is a steady stream of new responsible investing funds.”
The full survey is available at: www.alfi.lu