Interest in environmental, social and governance investing is on the rise. Among advisors, not so much.
So says a new report from Cerulli Associates, U.S. Product Development 2018: Priorities for Active Managers, which says that while more investment products incorporating ESG factors are available and home offices have bought into the idea of ESG investing — even awareness in society at large about ESG factors is on the rise — actual investment in ESG products is trailing.
The reason, according to the report, “lies somewhere between the advisor and investor.”
“There are several factors at play to help explain why financial advisors have not wholeheartedly adopted ESG mutual funds and exchange-traded funds (ETFs),” Brendan Powers, senior analyst at Cerulli, says in the report.
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Powers adds, “A sense that ESG strategies do not fit into client investment policy statements (26%), negative impact on investment performance (24%) and cost (19%) top advisors’ reasons to not use ESG strategies.”