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Sustainable investing is going mainstream, and there may be no better indicator of that than the results of Nuveen's latest annual responsible investing survey.
For the first time, the majority of the investors surveyed (53%) cited performance, not alignment with their values nor better risk management as their motivation for investing in responsible investments, according to the annual survey, Nuveen's fifth.
In addition, 68% of advisors said that investors who have incorporated responsible investing into their portfolios typically outperform those without those investments, up from 28% the year before. Just 32% of advisors said responsible investment portfolios yielded above market-rate returns in the past, but even that but that's almost three times the percentage of the year before.
Nuveen surveyed 1,007 investors over age 21 with $100,000 in investable assets, excluding their workplace defined contribution plan, throughout most of December 2019. Its survey of 310 advisors took place between early December 2019 and early January 2020.
Sustainable funds have been outperforming their traditional counterparts this year. Morningstar reports that 44% of sustainable equity funds ranked in their category's best quartile in the first quarter, or almost twice the number of funds one would expect in any given quartile.
S&P Global Market Intelligence report found that year-to-date through May 15 83% of 17 ESG mutual funds and ETFs with more than $250 million in assets outperformed their xxx counterparts.
Sustainable investing funds have also been attracting huge inflows, setting a record of $21.4 billion in 2019 followed by $10.5 billion in the first quarter of 2020, according to Morningstar.
With first-quarter flows already at half the 2019 calendar-year record of $21.4 billion in net flows, compared with $5.75 billion the year before. Fourth quarter flows led the upsurge, jumping to $7.1 billion from $5 billion in all previous quarters last year.
Given this backdrop of the growing popularity of sustainable investing, it's not surprising that an increasing number of advisors are raising responsible investing in their discussion with investors — 65% in 2019, up from 51% IN 2018, according to the Nuveen survey.
Eighty percent reported having a deep conversation with clients about their clients' values but 79% said they find it challenging to explain responsible investing to their clients — half admit to a lack of knowledge. Sixty-three percent.
Nuveen says there is a huge opportunity for advisors to discuss responsible investing with their clients, and not just with millennials. According to its survey, Gen Xers showed the most interest in sustainable investing (39%) followed by baby boomers (24%) and millennials (22%).
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Bernice Napach
Bernice Napach is a senior writer at ThinkAdvisor covering financial markets and asset managers, robo-advisors, college planning and retirement issues. She has worked at Yahoo Finance, Bloomberg TV, CNBC, Reuters, Investor's Business Daily and The Bond Buyer and has written articles for The New York Times, TheStreet.com, The Star-Ledger, The Record, Variety and Worth magazine. Bernice has a Bachelor of Science in Social Welfare from SUNY at Stony Brook.
