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Saturday, June 15, 2024

Woke Goes Broke: ESG Fund Assets Drop $163 Billion

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As I was telling Andy Caldwell on his show, corporate wokeness has never been this vulnerable. Suddenly boycotts like those aimed at Bud Light and Target are actually hurting companies instead of being shrugged off. When the money was easy, investors flocked to throw money at companies that promised endless growth. Now the growth is slowing if not outright reversing and investors are moving their money. The downward pressure suddenly has even the FAANG darlings showing off cuts and layoffs. ESG, once a way to upsell investors and make them feel good, is an albatross as everyone focuses in on value over style and virtue signaling. And ESG, a very effective vehicle for a leftist takeover of companies and the general corporate environment, isn’t offering value. Woke is going broke.

Funds focused on environmental, social and governance issues (ESG) also saw a fourth consecutive month of net selling, down 953 million pounds – taking the total pulled from such funds to nearly 2 billion pounds since May.
“Fear was a big motivator in August,” said Edward Glyn, head of global markets at Calastone. “With savings interest rates and yields on safe-haven money market funds at their highest level since 2007, it doesn’t take much to cause a rout.”
Asset managers, which had previously cashed in on a surge in demand for ESG funds, should take note of the developing sell-off, said Calastone’s Glyn.

That is why Woke. Inc is afraid.

“The move out of ESG funds has gathered pace in a remarkable reversal after the boom in recent years. Four months of outflows signals a new trend emerging that fund houses will have to work hard to counteract.”

Or they could stop pushing investment vehicles of dubious economic and political worth. But that’s as likely as having them admit that the world isn’t ending, the oceans won’t flood the world and most of the green energy businesses are useless and wouldn’t exist without government subsidies and mandates.

How much more will investors put up with?

“Research from AML Group and The Nursery found a 6% decline in investors valuing ESG or sustainable investing in 2023 compared to 2022. A Charles Schwab survey reinforced this, indicating that just 38% of British retail investors consider environmental, social, and governance factors when making investment decisions, a drop of 6 percentage points from December 2021. A significant factor is the underperformance of these investments compared to their non-ESG peers, as highlighted in the Charles Schwab study.”
“Furthermore, ESG investments often come with a higher price tag, a cost many investors are becoming reluctant to bear. Charles Schwab’s research suggests only half of the surveyed investors are willing to assume these extra charges.”

Investors want to maximize returns rather than subsidize leftists? Baffling.

“As of December 2021, funds that openly target environmental, social, and governance (ESG) objectives managed over USD2.7 trillion worldwide. European funds represented 81% of this amount, while U.S. funds made up 13%. In the final three months of 2021 alone, investors poured USD143 billion into these ESG funds. However, these funds frequently fail to deliver the expected returns… Lipper data shows that the total assets under ESG fund management plummeted by USD163.2 billion globally in the first quarter of 2023 from the previous year.”

As I said, Woke Inc. has never been this vulnerable. Boycotts that were ignored are now potent. Regulations that corporations might have shrugged aside have the potential to be the last straw on the camel’s back.

The question is will conservatives take full advantage of the season?

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