Canadian ESG Investing Soars in 2020

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Ian Tam: Coronavirus was the story of 2020. It was constantly lurking in the shadows, even when other news briefly stole the spotlight. Now, with everything going on, it might have been easy to miss the exceptional growth rate of sustainable investments in Canada. In 2020, Morningstar identified 41 new sustainable funds and ETFs that came to market from Canadian domiciled fund manufacturers. Now, that's more than twice the number launched in 2019, and it seems that demand is growing as well.

On the chart here, you can see that over just the past three years, assets invested in sustainable funds and ETFs have actually doubled with noticeable acceleration in growth just in the last 12 months. Although it's still a very small fraction of the total retail fund market, we estimate that the year-over-year assets in the space grew by a whopping 67%. Plus, it seems that an increased amount of assets are being funnelled into passive or index products, which typically come with lower costs.

Now, of the roughly 140 sustainable products available to Canadians, we can see that 51 of them are available as ETFs, which makes it very easy to invest sustainably through a discount brokerage. Most of these ETFs have been launched just within the last three years, so the performance history is rather limited. However, we have come up with a shortlist of sustainable ETFs that are placed in the top one-third of their respective category groups over the last 12 months in 2020. To see that list, consult the table accompanying the transcript to this video.