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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.

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