If you can’t find the product you want, why not build your own?
When Ilmarinen backed the creation of a suite of ESG focused ETFs this year, it underlined two trends. The first is the continued ascent of ESG as a consideration for large institutional investors the world over. The second is the way these asset owners are seeking to work with asset managers to develop strategies suited to their needs.
Ilmarinen, Finland’s largest pension provider with assets in excess of €47bn, co-created the ETFs with BlackRock, DWS and Lyxor, seeding them with investments of more than €1bn. The ETFs invest in US and European variants of the MSCI Leaders index series, which includes companies with the highest ESG scores.
The fact that an ETF was the chosen vehicle for this new product underlines the breadth of its utility as a transparent, accessible structure suited to a broad array of asset classes and investor types. Working with the providers allowed Ilmarinen to tailor the strategies to its needs, while using the ETF vehicle allows ‘crowding in’ of further capital, leveraging the positive change Ilmarinen seeks to effect. A traditional segregated account would not have had this crowding in effect.
At $5.7trn today, ETF assets continue to grow, with assets set to reach $10trn in the next five years, having easily outpaced mutual funds in asset growth terms in the years following the financial crisis. As such, the ETF continues to embed itself in the world’s asset management architecture.
Liam Kennedy, Editorial Director, Investment & Pensions Europe
Editor’s note: this guide contains a number of articles by the sponsors. The publication of these articles should not be taken as an endorsement of their contents.