ESG Funds Experience Outflows Due to Underperformance and Political Criticism, Leading to Course Correction in Investment Strategies

Billions of dollars have been leaving environmental, social, and governance (ESG) funds in 2023, marking a sharp turn from two years ago, when billions of dollars poured into the industry, according to data from Strategas. The departure from ESG investing is mainly due to the funds’ underperformance, as they have not lived up to expectations, and political criticism, which has led ETF providers to remove the ESG label. Analysts predict a significant course correction as assets managers are shying away from ESG investment strategies, and some are stripping the terminology from exchange-traded funds.

ETF Newz Says:

More than a quarter of fund managers still focus on launching ESG funds that consider broad ESG issues, according to a recent HSBC ESG Sentiment Survey, and more than a third indicated that ESG would be mainstream in a decade.

Heavily Traded ETFs
SPDR S&P 500 - SPY
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Vanguard Total Market - VTI
Energy Select Sector - XLE

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