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How One BlackRock Portfolio Tweak Unleashed a Flood of ESG Demand

This year’s top asset-gathering sustainable ETF plays a supporting role in the firm’s models.

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Sustainable strategies have attracted more than $26 billion of net new money this year through August, already surpassing the then-record $21.4 billion they attracted in 2019.[1] Nearly one fourth of that haul has gone to iShares ESG Aware MSCI USA (ESGU), which saw a surge in demand after its addition to the firm’s model portfolios in January. It’s a sign of both investors’ increased willingness to employ sustainable strategies and how popular model portfolios can nudge investor behavior.

Third-party model portfolios are a growing option for financial advisors that are looking to outsource some, or all, of their portfolio management responsibilities. More than 400 have launched since 2018, with a growing number focused specifically on environmental, social, and governance mandates. In our recently released Model Portfolio Landscape, we identified 29 model portfolios that specifically target ESG mandates.

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Jason Kephart does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.