BlackRock Inc. and Goldman Sachs Group Inc. have made recent moves by closing several funds that focus on environmental, social, and governance (ESG) criteria, impacting their exchange sales.
According to reports, BlackRock has shut down eight exchange-traded funds (ETFs) with total assets approximating $109 million. This action comes from a New York-based asset management firm, and it’s worth noting that BlackRock’s iShares is the largest ETF publisher, overseeing about $3.4 trillion across 470 ETFs in the U.S.
High Yield Saving Offers
Goldman Sachs, managing $41.9 billion in ETFs, has also closed its Goldman Sachs Future Consumer Equity ETF and Goldman Sachs Future Planet Equity ETF, with respective asset reductions of $17.2 million and $12.5 million.
In the case of BlackRock, the ESG-focused mutual funds that have been closed were seen as a response to criticism regarding the prioritization of social concerns over fiduciary duties. Such criticisms often reflect a larger political trend where diversity and sustainable energy receive less emphasis in favor of traditional, carbon-based resources. Other ETF issuers like State Street and Janus Henderson have similarly scaled back on their ESG offerings in recent years.
It’s common for ETF issuers to pull funds that are losing investor interest due to outflows or decreased relevance. Nevertheless, new fund launches continue to surge, setting records last year. Currently, around 4,300 ETFs are actively traded.
The recent closures by BlackRock, while relatively small in terms of assets, mainly involve funds that have been operational for between three to six years. The largest of these was the iShares Commodity Curve Carry Strategy ETF, which had $42.2 million in assets and was launched in 2020. Despite this, it saw a net withdrawal of $1.9 million this year, although tracking commodity futures has shown a modest uptick of 1.8% over the past three years.
As for Goldman Sachs, their Future Consumer Equity ETF saw investors withdraw $17.5 million, while $28.8 million was pulled from the Future Planet Equity ETF this year. Interestingly, the GSFP fund recorded a gain of 7.7% this year, easily outperforming the S&P 500’s 2.3% increase. However, it does come with a relatively high management fee of 75 basis points.
