Tuesday, 26 July 2022 03:44

Recessionary Fears Lead to ESG ETF Closures

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While ESG investing is still in favor with pension funds, fears over a recession are leading to the closure of several ESG ETFs. According to Bloomberg, ESG ETF closures account for 15% of all U.S. ETF closures this year. While that may not seem like a lot, ESG ETFs only represented 4% of all U.S. ETFs at the beginning of the year. The most recent closure was the Ark Transparency ETF (CTRU), managed by Cathie Wood. That closure brought the total to seven this year. During the bull market, ESG ETFs saw plenty of inflows as investors sought funds that aligned with a greener future. However, the market downturn and fears of a potential recession have put ESG on the back burner. Investors are now more concerned with portfolio protection than sustainable investing.

Finsum: While ESG investing was quite popular during the bull market, the recent downturn and fears over a recession have led to the closure of several ESG ETFs.

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