There has been a ‘massive surge’ in investors seeking environmental, social and governance (ESG) investments as they are regarded by them as a safe haven asset.
According to deVere Group, investors believe ESG investments offer them financial protection in volatile times and could retain or gain their value even in a down market.
This meant ESG was replacing assets such as US Treasuries as a defensive choice.
They were particularly popular among millennial clients with 80% of millennials including ESG credentials in their investment criteria. Given millennials were set to be the largest beneficiaries of intergenerational wealth in the coming years – an estimated US$30 trillion ($42 trillion) – this indicated ESG demand would similarly increase.
Nigel Green, chief executive of deVere, said: “There’s been a massive surge from clients this year looking for ESG investments. More than a quarter of all clients are currently considering or are already actively engaged in responsible, impactful and sustainable investing”.
He continued: “However, what is perhaps particularly interesting are the reasons why investors are seeking ESG in the first place.
“The majority [56%] now say that they perceive ESG investments as the new safe-haven asset class. As such, they are increasing their exposure to such funds in a way that traditionally they would have done with, say, gold or US government bonds.
“They would be correct in citing this view. All the latest research underscores that the majority of environmental, social and governance investments have outperformed their non-sustainable counterparts this year and have had lower volatility.”
