• Sustainable Fund Growth: Despite C$2.1 billion in outflows, assets in sustainable funds hit a record C$61 billion in Q2 2024.
• Expanding Options: New sustainable funds from National Bank and Desjardins reflect growing interest from asset managers.
• Market Diversification: No single asset manager now holds more than 20% of sustainable fund assets, signaling a more competitive market.

Canadian ESG Investors Getting More Fund Options to Choose From

Canadian investors focused on sustainability now have more choices than ever. Despite a record outflow of C$2.1 billion in Q2 2024, largely due to a single institutional investor’s withdrawal from the BMO MSCI USA ESG Leaders ETF ESGY, the overall landscape for sustainable investing in Canada is expanding.

Sustainable Fund Growth

Sustainable fund assets in Canada have reached an all-time high of C$61 billion, marking a 19.6% increase since March 2024. This growth is underpinned by strong performance metrics, with 29% of these funds ranking in the top quartile of their respective peer groups. “Sustainable allocation funds led the charge, with 60% landing in the top half of their categories,” according to Morningstar’s Q2’24 report.

Expanding Fund Lineups

Asset managers continue to broaden their sustainable offerings. National Bank introduced a six-fund target risk lineup, and Desjardins launched its seventh sustainable bond fund in two years. These funds align with the ESG Best-in-Class, ESG Thematic Investing, and ESG Related Engagement and Stewardship approaches, following the Canadian Investment Funds Standard’s Committee’s Responsible Investment Framework. Desjardins has also implemented an ESG Exclusion approach, further enhancing its commitment to responsible investment.

Market Diversification

The Canadian sustainable fund market has become more competitive. As of June 2024, no single asset manager accounts for more than 20% of sustainable fund assets, a stark contrast to 2019 when NEI Investments held over 50%. Firms such as Desjardins, National Bank, Mackenzie, and iShares are now key players, offering a diverse array of funds across asset classes.

Related Article: Morningstar Strengthens ESG Leadership with Michelle Cameron Appointment

Looking Ahead

Sustainable investing in Canada is still evolving, with institutional investors and balanced funds significantly influencing market trends. Yet, asset managers are steadfast in their commitment to expanding options for investors seeking to align their financial goals with ESG principles.