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US News Almost 60% of fund assets will be ESG by 2025, says PwC

15:25  19 october  2020
15:25  19 october  2020 Source:   stern.de

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Retail (mutual) funds (including ETFs) will almost double assets by 2025 and institutional PwC forecasts that funds under active management will climb from US$ 60 .6 trillion in 2016 to US Asset managers need a keen eye for the technological developments that will be driving exponential change.

Almost 60 % of Mutual Fund Assets Will Be ESG by 2025 , PwC Says . Bond funds will grow at a rate of 30.4% and assets will exceed 1.6 trillion euros in five years time.The consulting firm’s report, which was published by its Luxembourg unit, also featured a survey of 200 asset managers, 300

(Bloomberg) - ESG investing is the most significant development in wealth management since the creation of exchange-traded funds (ETFs) two decades ago and will turn the industry upside down as well passive funds.

This is the result of a new report from PwC. It predicts that by 2025, 57%, or € 7.6 trillion, of mutual fund assets in Europe will be held in funds that take environmental, social and governance (ESG) factors into account, compared with 15.1% at the end of last year. In addition, 77% of institutional investors surveyed by PwC said they plan to stop purchasing non-ESG products within the next two years.

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PwC estimates that mutual fund asset -weighted fees will fall by 19.4% from 0.44% in 2017 to 0.36% in 2025 . As passive funds continue to grow in popularity and price becomes a key differentiator, they will see the sharpest We estimate up to 20% of firms in developed markets will be eliminated by 2025

PwC estimates that mutual fund asset -weighted fees will fall by 19.4% from 0.44% in 2017 to 0.36% in 2025 . As passive funds continue to grow in popularity and price becomes a key differentiator, they will see the sharpest We estimate up to 20% of firms in developed markets will be eliminated by 2025

Photographer: Luke Sharrett / Bloomberg

After racial and economic injustice as well as climate change became central social issues in recent years, financial companies were forced to pay more attention to fairness and environmental friendliness. This has manifested itself in an explosion of ESG funds for asset managers of all categories, from pension funds to private equity firms to hedge funds. They hired sustainability teams, introduced new products and extolled their environmental friendliness.

"ESG is nothing less than a major change in the investment landscape, with the same competitive conditions for financial and non-financial performance criteria," wrote PwC in the report published on Monday.

ESG funds are flourishing in Europe as regulators and policymakers have made green issues a top priority and put in place a set of rules to ensure financial firms incorporate sustainability into their operations and eradicate so-called greenwashing. At the same time, growing public awareness of ESG-related risks - accelerated by Covid-19 - and the emergence of a generation of investors who prioritize non-financial impact alongside financial factors have fueled growth, according to PwC.

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When you join PwC you can also: Set preferences for tailored content suggestions across the site. Avoid a slide back into protectionism, which history suggests would be bad for global growth in the long run. Ensuring that the potential benefits of globalisation are shared more equally across society.

The consultancy group foresees retail funds , including exchange-traded funds (ETFs), to almost double by 2025 and growing investments in Despite the optimistic future for wealth managers, PWC suggested they will have to adapt to survive a new landscape. " Asset managers can take advantage

ESG outperformance

The performance of ESG funds in recent months compared to their traditional competitors has also caught the attention of investors, according to PwC. Fund managers from BlackRock Inc. to Allianz Global Investors and Invesco have reported that ESG portfolios outperformed during the Covid-19 selloff .

“These catalysts will usher in the greatest change the European wealth and wealth management industry has ever seen. It gives managers the opportunity to drive change by playing a key role in reducing climate risk, ”said PWC.

PwC forecasts an average annual growth rate of 26.8% for ESG equity funds and a quadrupling of the capital under management to more than 3.6 trillion euros by 2025. The bond funds are estimated to grow 30.4% and assets to exceed 1.6 trillion euros in five years.

Europe dominates ESG market

The consultancy's report, published by its Luxembourg division, also included a survey of 200 asset managers, 300 institutional investors and more than 800 private investors.

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Richard Snook, senior economist at PwC , said people are increasingly being locked out of owning a home in London as demonstrated by a sharp rise in private rental and a drop in home ownership. London will be the worst affected, with a predicted rise of 24.4 per cent from 2000 to 2025 but renting

When you join PwC you can also: Set preferences for tailored content suggestions across the site. By 2025 , there will be 37 ‘megacities’, up from 23 today, and 12 of these will be in emerging By 2025 , emerging markets will host 60 % of global construction activity. By 2050, the number of people

The study found that 37% of institutional investors are willing to pay a premium for ESG products, with the majority of them willing to pay between 21 basis points and 40 basis points more. It also showed that 77% of institutional investors plan to stop investing in traditional, non-ESG-compliant products within the next two years. However, only 14% of asset managers signaled plans to stop launching these products during the same period.

According to PwC, Europe dominates the global ESG landscape. The region's 4,741 ESG mutual funds hold nearly 70% of global ESG assets. PwC expects the impact of Europe's green enthusiasm to extend beyond its borders as new demands are placed on non-EU companies and investors. However, US wealth managers could potentially face limits on green investments.

Original article headline:

Almost 60% of Mutual Fund Assets Will Be ESG by 2025, PwC Says

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