SustainableInvest.com on ESG MMFs
Website SustainableInvest.com published the piece, "Money Market Funds and Sustainable Investing: Happy Together." They write, "Additional money market funds have jumped onto the sustainable investing parade by launching or converting existing money market funds to reflect the adoption of various sustainable investing approaches, ranging from negative screening (exclusions) to ESG integration, engagement, and even some variations of impact investing. In the last five months or so, a total of 15 funds comprised of 87 share classes, a mix of prime, government and municipal money funds with constant and fluctuating net asset values (NAVs), were added to an already expanding universe of sustainable money market funds. These 15 investment vehicles, which added a combined total of $267.5 billion in net assets, consist of both existing funds whose mandates have been updated via prospectus amendments or newly launched funds offered by J.P. Morgan, Morgan Stanley, Goldman Sachs and State Street. On top of the three funds available from GuideStone, BlackRock and DWS that were already in operation, this brings the total number of sustainable money market funds currently offered to institutional investors and, to a lesser extent, retail investors, to 18 funds with about $269.5 billion in net assets as of September 30, 2019.... Additional money market fund entrants into the sustainable investing landscape is expected." The website adds, "The approaches vary across the seven firms. Even as their methodologies vary, only two firms have adopted a strictly ESG integration approach. The other five firms have each adopted varying approaches that combine one or more strategies, with two firms implementing a unique impact investing tactic either alone or in combination with other approaches. In the end, five firms have incorporated the consideration of ESG risks and opportunities into the investment decision process. This, even as the impact of environmental (E) and social (S) factors on credit and liquidity risks, on top of fundamental financial considerations, are likely to have limited impact and no upside effect given the short-term tenor of money market eligible securities, especially when such securities are held to maturity." For more on ESG MMFs, see these CD News articles: UBS Asset Mgmt Files to Launch Select ESG Prime Institutional Fund (11/4/19), BlackRock Launches First Offshore ESG MMF; ICS LEAF in EUR, GBP, USD (7/22/19), Money Fund Assets Up 13th Week Straight; Fitch on ESG in Money Funds (7/19/19), SSGA Goes Live with ESG Money Market Fund; Fitch on Prime MF Inflows (7/3/19) and Cap Advisors Group Demystifies ESG Investing; Weekly Portfolio Holdings (6/19/19).
