Just 14 of 200 institutional investors and fund allocators believe environmental and sustainability factors are one of the most important fund-selection drivers, according to a study by CoreData Research released Wednesday.
Conducted in November, the online survey found more than half of global investors with $5 trillion in assets said that a fund's performance track record, the investment philosophy of its managers and in-house investment selection process were the top factors guiding fund selection.
These factors were followed by risk management process and fees, with 36% and 32% of respondents, respectively, saying they pay attention to those considerations when selecting funds.
Only 10% of asset allocators in the U.K. and 9% in North America attached the most weight to ESG, followed by 5% of European investors. No respondents in Asia or Latin America said ESG was a prime driver.
"The surprisingly small role assigned to ESG in the fund selection process may reflect difficulties evaluating the sustainable credentials of funds due to a lack of transparency and reported data," said Craig Phillips, head of international at CoreData Research, in a news release. Mr. Phillips added that asset owners are concerned about regular funds being sold by managers as ESG focused, known as "greenwashing."
The research also found that globally, over half of respondents, which included private banks, funds of funds, independent wealth managers and insurers conduct a comprehensive review of active managers quarterly. Some 18% of them review managers monthly, with the U.K. and Latin America keeping the closest tabs on active managers.
According to CoreData, about 19% of investors review managers in Europe on a monthly basis, while 15% of North American respondents carry out a monthly review.
