Overall, 141 sustainable ETFs with $70.0 billion in assets were on offer in the U.S. at the end of October 2020, with sustainable fixed income ETFs passed the $20 billion level (refer to Chart 1). Comprised of both sustainable taxable and municipal ETFs, sustainable fixed income ETFs now account for 30% of sustainable ETF assets in the US. At only $1.0 billion, sustainable municipal ETFs make up a small 5% percentage of total sustainable fixed income ETF assets. That said, municipal sustainable ETFs expanded by $262.9 million, or an increase of 34% over the trailing three-months.
Chart 1: Sustainable fixed income ETFs (10/31/2020)
Sources: Morningstar Direct; Sustainable Research and Analysis LLC
The municipal sustainable ETF investment category consists of only four funds, all actively managed by Eaton Vance, Hartford Funds (Wellington Mgt.) and J.P. Morgan. J. P. Morgan Investment Management dominates the category with its $836 million accounting for 81% of the segment’s assets and $252 million growth over the last three months. As part of its security selection strategy, J. P. Morgan also evaluates whether environmental, social and governance factors could have material negative or positive impact on the cash flows or risk profiles of securities universe in which their fund may invest (refer to Table 1).
Table 1: Sustainable municipal ETFs and their sustainable investing strategies (10/31/2020)
|Fund Name||$ AUM||Sustainable Investing Strategy|
|JPMorgan Ultra-Short Municipal Inc ETF||835,819,258||ESG Integration|
|Hartford Municipal Opportunities ETF||120,816,641||ESG Integration|
|JPMorgan Municipal ETF||62,341,547||ESG Integration|
|Eaton Vance TABS 5to15Yr Ldrd MuniBd NS||7,471,825||ESG-Consideration|
Sources: $AUM Morningstar Direct; Sustainable Research and Analysis LLC (SRA). Notes of explanation: Sustainable investing Definitions/per SRA: ESG Integration-The fund will integrate ESG and may also engage with stakeholders, ESG Integration-Consideration-The fund may integrate ESG. ESG Integration-Mixed-Core strategy consists of ESG integration, but exclusions, impact or thematic approaches may also be employed. Sustainable investing strategy source: Fund prospectus and related documents as compiled by Sustainable Research and Analysis.
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