European SRI retail mutual funds see further growth in 2013

European SRI retail funds’ assets reached an historic peak of €108 billion (c.£90bn) at the end of June 2013 and represented a 14% increase over the preceding year according to the thirteenth ‘Green, Social and Ethical Funds in Europe’ annual study published this November by Vigeo, the leading expert in responsible performance that measures and rates more than 2,500 companies globally across six areas of corporate social responsibility.

The 27-page study, which was produced in partnership with Morningstar, spanned the period June 2012 to June 2013 across 13 European countries - from Austria to the UK.

It reveals that after having been “stable for three years”, the number of UCITS (Undertakings in Collective Investments) funds increased by 38 (+4.3%) to 922 across Europe by June 2013 - from 884 over the year before.

Fouad Benseddik, Vigeo’s Director of Methodology and Institutional Relationships in Paris, commenting stated: “Our [latest] research has shown that retail SRI has defended and increased its market share and assets.
Furthermore, in some [European] countries it represents a relevant portion of the national asset management industry.”

According Vigeo’s analysis of the trends, which is peppered with tables and charts in the study, The Netherlands was the “most dynamic” market in terms of growth in such assets at +106%, followed by the UK (+30%), Sweden (+28%) and Switzerland (+18%).

The study nevertheless indicated that there were “mixed trends” across Europe at play. The report noted: “Retail SRI is still a niche (1.7% of the total European AUM), but its significance varies from country to country, showing the different levels of maturity of national industries.”

For example, while France remains the largest market for SRI retail funds and has seen strong growth in recent years, it saw a 7% decline in terms of assets in the latest period under review.

It was followed by the UK in second place, with the Netherlands and Switzerland ranking jointly third.

The Nordic countries and the UK are “solid markets, where SRI issues are culturally understood and integrated in mainstream investment strategies” according to the study. Illustrative of this, separate figures from ethical investment research firm EIRIS revealed in October 2013 that money invested in UK-domiciled green and ethical funds had reached £12.2bn (€14.3bn) - its highest ever level.

By contrast Italy and Spain are “still the tail end” when compared to other European countries.

Other key highlights revealed that The Netherlands exhibited the highest rate of market penetration for SRI retail funds at 15% - versus 7.4% from the analysis as of June 2012.

Equity funds still outweigh fixed-income funds, 54% to 33%, and money market funds have lost market share after years of consistent gains since 2007/2008.

In terms of the top 10 funds by size, there are four new entries in this year’s study.

The top ranked fund is BNP Paribas Mois, a fixed-income French fund (€3,933m assets) managed by BNP Paribas

Asset Management, followed by another fixed-income fund Aviva Monétaire ISR €2,395m).

Other new entrants hark from the Netherlands (SNS Euro Mixfonds), Germany (DWS Invest Global Agribusiness) and the UK (CIS UK Growth Trust).

Vigeo, which is present in London, Paris, Brussels, Milan, and Tokyo, produces rating research that is externally certified to the Arista standard. Sustainability analysts Giuseppe Bresin and Stefano Ramelli were among co-authors of the study.