ESG ETFs will take 'a larger share of inflows' from European investors in 2022

European investors intend to significantly grow their allocations to ESG exchange-traded funds (ETFs) in 2022, as the EU's Sustainable Financial Disclosure Regulation (SFDR) is increasingly used to inform investment decisions, new research found.

A survey by Tabula Investment Management, conducted among professional investors who collectively manage $145bn, revealed a 42% year-on-year increase in those who expect to "significantly allocate" new investments - defined as by 30% or more - into ESG-focused ETFs.

The survey findings revealed that 57% of investors expect to allocate between 30% and 50% of new investment in ETFs into ESG-focused vehicles, up from 33% actually allocated in 2021.

Meanwhile, 14% signalled they intend to allocate more than 50% into ESG ETFs this year, down from 17% last year.

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Over half of the 100 investors surveyed across countries including France, Germany, Italy and the UK, said they use SFDR articles to inform their ETF investment decision-making.

Among those surveyed, 28% plan to allocate between 10% and 30% to ESG ETFs in 2022, compared to 34% whose allocation fell into this percentage in 2021.

An analysis by Tabula revealed that in 2021, net new assets for Article 8 and 9 European ETPs doubled compared to the prior year.

Michael John Lytle, CEO of Tabula, said: "Our research shows that ESG-focused ETFs are increasingly taking a larger share of inflows and we believe this trend will grow."