Tectonic Shift to Sustainable Investing

  • BlackRock Investment Institute (BII)

  • It's important that investors keep a long-term perspective during market volatility.

    One long-term theme: sustainable investing.

    Changing investor preferences are leading to increased investment into sustainable assets.

    Fund flows in 2020 offer a miniature version of this shift.

    Money has consistently flowed into sustainable exchange-traded-funds (ETFs) this year.

    But traditional ETFs have seen heavy outflows in the market selloff.

    Flows to sustainable funds are still very small compared with flows to traditional funds,

    but we are seeing evidence of a structural shift toward sustainable investing.

    We see portfolio rebalancing after recent selloffs in risk assets

    as an opportunity to substitute some traditional assets with sustainable ones.

    Flows into sustainable assets are still at the beginning,

    and we believe markets aren't pricing in a shift to sustainable investing yet.

    Investors holding sustainable assets may gain a return advantage over the long transition.