SRI Funds Take in $4.7b in Q1 ’17

In recent years, socially conscious investing has gained greater traction as investors increasingly look to put their assets to work in alignment with their beliefs. Whether referred to as environmental, social and governance (ESG), socially responsible investing (SRI), or impact investing, this type of strategy aims to reflect investors’ moral and ethical values through specifically screened funds.

While the size of this universe can vary, depending on the criteria used to define it, Strategic Insight’s “Socially Conscious” classification pegs mutual fund assets in these products at

$199 billion as of the first quarter of this year, excluding funds-of-funds to avoid double counting. Accounting for the greatest share of assets in this cohort is American Funds’ Washington Mutual Investors Fund—which excepts alcohol and tobacco—having $90 billion in assets and a 45% market share.

Despite the large asset base of Washington Mutual, the majority of net inflows over the 12 months ending March 31 can be attributed to funds managed by Parnassus and Pax World. As a whole, socially conscious funds attracted $4.7 billion of net inflows during this period, with $4.6 billion flowing to Parnassus and $1.8 billion to Pax World.

It is worth noting that even as the figures and exhibits displayed here exclude funds-of-funds, there continues to be development in the target-date fund (TDF) corner of this market. During this year’s first quarter, Natixis launched the industry’s first broad-based ESG-focused target-date offering with its Sustainable Future series. Natixis joins managers such as GuideStone (faith-based), American Century (no tobacco) and American Funds (which manages Washington Mutual) that currently incorporate certain degrees of social responsibility into their target-date funds.