The latest annual report on ethical, green and social funds at the retail level across Europe from Vigeo, the leading European rating agency evaluating corporate responsibility, reveals that the SRI retail fund market continued to grow in 2015 and posted an 8% increase to almost €136 billion (c.$149bn) in assets in management (AUM) over the previous year.
While the European market continued to display “rapid growth” according to Vigeo Italy, which produced the findings for socially responsible investing in conjunction with fund analyst and data provider Morningstar, the figure represents just 1.7% of the overall retail funds market. Still, growth revealed in Vigeo’s last three annual studies since 2013 has ranged between 8% and 18%.
Fouad Benseddik, Vigeo’s Director of Methodology, commenting said: “SRI continues to represent a form of investment that is dynamic and a forward looking solution. The number of funds, AUM and players engaged continue to show growth, which confirms the capacity of SRI to resist to the crisis.”
Titled ‘Green Social and Ethical Funds in Europe’, the 15th edition of Vigeo’s study reveals that AUM for the SRI retail funds market rose from €€127bn in 2014 - and is up around €€9bn this year. The number of funds increased by around a quarter (+25.8%) and reached a new record of 1,204 funds versus 957 funds over the corresponding period last year.
Illustrating the trend, the 957 funds reported in the 12 months to June 2014 was an increase of 35 funds (c.3.8%) over 922 funds in 2013 when retail funds’ assets reached a then peak of of €€108 billion (c.£90bn) as at the end of June 2013. That performance was a 14% increase over the preceding year according to Vigeo’s 13th annual study.
Interestingly, while the number of SRI funds available expanded significantly much more in the latest annual period under review, the value of the market increased 18% in 2014 to €€127bn (equivalent at the time to $162bn). That percentage is over twice the figure for the 12 months to June 2015.
In terms of European countries, France and the Netherlands showed growth rates this year of +4% and +7%, respectively. By contrast other leading countries experienced declines: Belgium (-10%), Germany (-5%) and the UK (-7%). Last year’s findings revealed the market share of SRI funds had increased in all markets surveyed.
The four largest markets - France, UK, Switzerland, and the Netherlands - confirmed their leadership this year and collectively account for 68% of European assets in SRI retail funds. Among the smaller European markets, all gained new assets: Spain witnessed +19% growth, Austria showed +17% and Italy posted +2.5%.
France is confirmed as the largest European SRI retail market accounting for 35% of the total and characterised by a high proportion of fixed-income funds. The UK remained in second place on 15% of the total. Vigeo points out that “the potential for the development of sustainable savings appears high in France” where this type of fund represents only 6% of assets.
The Netherlands retains the highest country market share for SRI retail funds even though it decreased this year compared to 2014, while Belgium ranked second (9.3%) in terms of SRI retail funds’ penetration.
Equity funds, which represented 52% of the total, still outweigh fixed-income funds (27%) and balanced funds (21%). However, their share has not yet again reached the record of 67% from 2007. Amongst the top 5 highest performing SRI funds this year, four were French.