ESG
As referenced during the call, Schwab’s 2018 ETF investor study found that 52 percent of investors said it’s important for them to invest in socially responsible ETFs because they want their investments to align with their beliefs. That was up from 46 percent in 2017.
Iachini offered that the momentum seen in ESG (environmental, social and governance) investing will likely continue in 2019 because it had a solid 2018 to build off of.
He added that in 2018, funds classified by Morningstar as socially conscious or ESG, saw total inflows of roughly $2.3 billion.
Iachini noted that might not sound like a lot compared to the $300 billion-plus in total ETF inflows last year, but those $2.3 billion in flows boosted assets in ESG-focused ETFs to $6.2 billion.
“So over a third of the assets in ESG funds flowed in during 2018. That’s pretty large relative to where they started off,” Iachini said.
He posits there still aren't a lot of ESG ETFs out there, which means there's still a lot of growth potential in this space. By Schwab’s count there are a total of 54 ESG ETFs in the market—14 funds launched in 2018 and 16 funds launched in 2017. That means more than half of the total ESG product line launched within the past two years.
“This is still the early days for ESG or socially conscious ETFs, and the fact we saw pretty meaningful asset flows compared to where we started the year is an encouraging sign and I think that will continue in 2019,” Iachini said.