Spanish Managers Only Cover 2% Of The Equity In ESG Stock Funds

Sustainable investing continues to attract investors’ interest. According to Bank of America data, flows into ESG funds in 2021 are doubling last year. See more articles on sustainability in the Economist Sustainable Investing and ESG.

In Spain, as in the rest of Europe, entities are in the process of labeling their products as required by the European Commission. In accordance with the Regulations for the Disclosure of Information Relating to Sustainability, managers must classify their sustainable funds either as Article 8 of said regulation, or as Article 9.

Article 8 or light green products are less pure : it is enough to that promote sustainability characteristics. For their part, those of article 9 must have in themselves a sustainability objective (they are called dark green, which focus on having a specific impact, and usually correspond to thematic products, such as clean energy).

The data provider Morningstar collects just over 1,000 equity funds available for sale in Spain, in euros, cataloged as article 8 or 9 (the vast majority are 8). That number has been increasing in recent months, as the managers have been tagging them. Of those more than 1,000 funds, only 59 correspond to Spanish managers.

And these 59 products bring together 19,244 million euros, which represents only 2% of the total equity in ESG stock funds, in euros, that the Spanish investor can buy. The remaining 98% is in the hands of foreign managers. We are referring only to funds that Morningstar classifies as equity), and which also appear as article 8 or 9. In the case of stock market funds as a whole (whether or not they are sustainable), the percentage of Spanish funds is 4.4%.

Between CaixaBank AM and Kutxabank Gestión they account for 64% of the Spanish ‘pie’ of sustainable stock market funds
Among the domestic entities, CaixaBank AM and KutxaBank Gestión stand out due to the assets they manage in this type of product. CaixaBank AM brings together just over 6,354 million euros, and Kutxa adds 6,093 million. Between the two they monopolize 64% of the cake that the Spanish management companies take. The first has 12 equity funds, and the second with 11, all of them Article 8.

If we look at the Spanish products that perform the best so far this year, and we stick to those that are sustainable by prospectus, the Santander GO Global Equity ESG AE EUR Acc stands out , which scores 24.1% in 2021 , with Morningstar data through October 7.

This global equity product, launched last year, allocates 27% of its assets to invest in technology companies, and 16% to health and financial services. Its main positions include Microsoft, Alphabet, Apple, Bank of America and the pharmaceutical company Lilly. It obtains a Morningstar sustainability rating higher than the average for its category (which is Global Equities cap. Grande blend ), that is, 4 globes out of a maximum of 5.

With a profitability of 19.6% in the year, the Bankinter Sustainability R FI ranks second , which does have a track record (dating from 2003). Five years later, 8.8% annualized, and 8.6% over 10 years . Its sustainability rating is also 4 globes, which implies that it improves the average of its category, again that of Global Equity Cap. Great blend .

Technological and financial listed companies reached, in both cases, weights close to 17% in the portfolio, in which Microsoft, Alphabet, the Belgian bank KBC and the British utility National Grid stand out, due to their weighting.

The EDM International Strategy R EUR is placed in third position,by revaluing 18.7% in 2021. It has a long journey, which allows us to verify that, beyond what it achieves this year, a 7.9% annualized to 5 years has been recorded, and 7.5% to one of each. Like the previous ones, the sustainability rating given by Morningstar is 4 globes.

This product invests in European listed companies, and the highest weight is given to companies in the health sector (they account for about 25% of equity) and industry (21%). Among the companies with the highest weighting, chip systems maker ASML, Danish transport group DSV, Danish pharmaceutical company Novo Nordisk, Brenntag (German chemical distribution company), and eyewear maker EssilorLuxottica.

The Caixabank Index Clima Mundial Univ FI , launched in 2020, has risen 18.3% so far this year. It invests in equities from developed countries, high and medium capitalization countries and from any sector, including derivatives and ETFs that replicate indices. The most relevant weight is held by technology companies, and the United States accounts for about 70% of the portfolio. Morningstar also gives you the 4 globes in sustainability.

Of this selection, the only one that obtains 5 globes as a Morningstar sustainability rating is Caja Ingenieros Bolsa USA A FI, which implies that it scores better in ESG than the average for products in its category. It is positioned on US listed companies, especially technological, financial and consumer cyclicals. In the portfolio, again names like Microsoft, Apple, Alphabet or Amazon.

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