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While the first 100 days of the Trump administration were rough on equity ETFs, among those taking the biggest hits were ESG exchange-traded funds.
Investors have pulled a net $623.9 billion from the 10 largest ESG funds over the past three months, a period beginning shortly after Trump’s January 20 swearing-in.
The largest, the $12.5 billion iShares ESG Aware MSCI USA ETF (ESGU), has bled $420.1 million, according to FactSet data. The BlackRock fund is down 8.7% over the past three months, slightly underperforming the 7.9% dip in the firm’s flagship S&P 500 fund, the iShares Core S&P 500 ETF (IVV).
ESG ETFs Under Attack
As President Donald Trump cut government spending on a range of programs promoting environmental, social and governance causes, such as diversity and social improvement, and pushed for further development of fossil fuels, investors have fled the ESG funds that collectively hold billions in assets.
The funds surged in popularity in previous years, offering investors and institutions opportunities to bet on companies that promoted social and environmental well-being. Still, they came under attack by conservative politicians and state officials beginning in 2022, and President Trump’s gutting of international aid, lawsuits against liberal institutions and promotion of fossil fuels has further eroded their popularity.
“The Trump administration's public disdain for the diversity, equity and inclusion (DEI) movement certainly hasn't helped the ESG investing theme,” said Kent Thune, CFP, etf.com senior research analyst. “While I don't think socially responsible investing is dead, I don't see it returning to its peak, either.”
Attacks Against ESG
Texas, Florida, West Virginia, Kentucky and Oklahoma have taken aim against ESG, in some cases banning government pension money from being invested in the funds.
Seven of the 10 biggest ESG funds come from New York-based BlackRock, whose CEO Larry Fink has downplayed the role of ESG as it’s come under fire. Most of the top ESG funds have had small inflows since Trump’s swearing in, with the second-largest, the $9.5 billion Vanguard ESG U.S. Stock ETF (ESGV), adding $64.6 million.
Three-Month ESG Fund Net Flows
Source: FactSet
Still, they were more than cancelled out by the $234.3 million in net outflows from the iShares MSCI USA ESG Select ETF (SUSA) and $185.3 million in outflows at the iShares MSCI KLD 400 Social ETF (DSI).