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$ AUMSustainable Investing Strategy
JPMorgan Ultra-Short Municipal Inc ETF835,819,258ESG Integration
Hartford Municipal Opportunities ETF120,816,641ESG Integration
JPMorgan Municipal ETF62,341,547ESG Integration
Eaton Vance TABS 5to15Yr Ldrd MuniBd NS7,471,825ESG-Consideration
Total1,026,449,271 

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.

Sustainable Research & Analysis LLC provides a timely monthly snapshot of trends and developments affecting the sustainable investing market segment as seen through the lens of mutual funds and ETFs. The Monitor tracks total net assets, fund flows, fund re-brandings, new fund firms, new fund launches and fund closures.  CLICK HERE to request additional information.

Text Box: Note of Explanation:  While definitions continue to evolve, sustainable investing refers to a range of five overarching investing approaches or strategies that encompass:  values-based investing, negative screening (exclusions), thematic and impact investing and ESG integration.  Shareholder/bondholder engagement and proxy voting may also be employed along with one of more of these strategies that are not mutually exclusive.  Prepared by:  Sustainable Research and Analysis LLC.Sources:  Morningstar Direct; Sustainable Research and Analysis LLC

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