IShares ESG fund assets drop 91% after largest investor downsizes ownership



People are seen outside an exhibition hall that hosts BlackRock in Davos, Switzerland on January 22, 2020. REUTERS / Arnd Wiegmann

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December 30 (Reuters) – The iShares ESG MSCI EM Leaders ETF (LDEM.O) suffered large capital outflows this week, public data showed, leading to a tenfold decline in assets under management by the focused exchange-traded fund. emerging markets sustainable businesses.

Finnish firm Ilmarinen Mutual Pension Insurance Company held 13 million ETF shares in September, making it the largest investor in the fund at the time, according to data from Refinitiv.

Ilmarinen’s senior portfolio manager Juha Venalainen told Reuters that Ilmarinen has significantly reduced its holdings in the ETF.

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“We have decided to reduce our exposure to emerging market equities. We believe that the risks in this area may have increased,” said Venalainen, adding that the transaction had surely reduced the capital of the fund.

“We are in no way disappointed with the ETF, the decision was purely allocative,” he said.

The number of outstanding shares of the fund, which underperformed its benchmark and whose top three holdings are Taiwan Semi, Tencent and Alibaba, fell more than 91% to 1.2 million on Monday from 13.9 million as of December 22.

The fund now manages around $ 74 million in net assets, up from ten times more at the start of the month.

BlackRock, the world’s largest fund manager who owns iShares, did not immediately respond to a request for comment.

The fund rose 0.9% at 3:16 p.m. GMT on Thursday. It has lost 3.5% so far this year, while its benchmark, the MSCI EM Extended ESG Leaders 5% Issuer Capped Index (.MIEF0EL2TNUS), is down 0.6%.

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Reporting by Danilo Masoni and Essi Lehto; Editing by Alden Bentley, Chizu Nomiyama and David Gregorio

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