Anti-ESG Funds Struggle for Traction
As the resistance towards ESG investing continues to grow, several anti-ESG funds have emerged in response. However, these funds have struggled to garner substantial inflows or deliver impressive returns, casting doubt on their long-term viability.
Recent data from Morningstar indicates a decline in inflows, with a peak of $377 million in the third quarter of 2022 shrinking by over 50% to $183 million in the first quarter of this year.
Currently, there are five distinct types of anti-ESG funds on the market. Some focus on political aspects, favouring companies that have been penalised by ESG factors.
Another category comprises vice funds, which invest in stocks related to alcohol, tobacco, and firearms—considered "sin" industries.
Additionally, there are voter funds that aim to counter ESG initiatives through voting strategies.
Lastly, the largest segment consists of funds that formerly considered ESG factors for investment decisions but have now abandoned such considerations.
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Vivek Ramaswamy, a Republican presidential candidate, founded Strive Asset Management, which is the dominant player in the anti-ESG market. Positioned as a competitor to industry giants like BlackRock and Vanguard, Strive initially witnessed strong demand for its first fund. However, subsequent funds have experienced minimal enthusiasm, with average inflows of only $5 million.
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Source: FINSUM
