Australia and New Zealand sustainable fund assets soared 54% year-on-year to a record A$27.9 billion (US$21.48 billion) as of March 2021, according to Morningstar Inc, which attributes the gain to lower fees compared to mainstream funds.
The estimated inflow into the sustainable funds was A$1.5 billion, the second highest on record after A$1.85 billion in the fourth quarter of 2020, the US investment consultancy says in a report on May 5.
Average fees for sustainable funds are “competitive” compared to mainstream funds, according to Grant Kennaway, director of manager research at Morningstar.
He says that on average, Australians are paying “slightly less” for sustainable equity and bond funds versus traditional funds.
“The cause of this can be attributed to the fact that there is currently a higher percentage of lower-cost passive investments within the sustainable investments universe,” he says in the report.
Morningstar notes that the sustainable fund market in Australia and New Zealand is quite concentrated, with the top 15 funds accounting for 52% of total assets.
The first-quarter inflows this year were dominated by five fund houses: BetaShares, Vanguard, Dimensional, Pendal Group, and Australian Ethical.
