The narrower cap benefits large banks by reducing the gap in deposit rates offered by their smaller counterparts that were paying up to 50 bps above benchmark rates, Tan said.
This would require further cuts to the benchmark five-year loan prime rate (LPR). Regulators may reduce the cap on deposit rates again if banks face greater pressure on net interest margins (NIM) or demand slows in the housing market, Morningstar senior equity analyst Iris Tan told S&P Global Market Intelligence on May 23. The People's Bank of China (PBOC) adjusts the ceiling, in part, through the market interest rate pricing self-regulatory mechanism composed of the country's major lenders. Bloomberg reported June 6 that large banks received a new directive to further reduce their deposit rates. Starting May 15, commercial banks were permitted to pay only up to 20 basis points (bps) above benchmark rates, compared with the previous 35-bps cap, on certain time deposits, according to a Weibo post from state-owned Xinhua Finance. The funds practice anti-ESG efforts in various ways such as through proxy voting policies, or by favoring certain types of companies.Ī fund that focused on sectors out of favor with ESG investors, like fossil fuels and tobacco, the Constrained Capital ESG Orphans ETF (ORFN.P) said this month it will be liquidated "due to inability to attract sufficient investment assets.Chinese authorities recently asked commercial banks to cut deposit rates, a move that could ease some pressure on lenders whose net interest margins are likely to remain weak due to low interest rates. A year earlier the figure was $282 million, but that excluded funds that had not yet launched, or adopted anti-ESG policies. Total assets among the 27 anti-ESG funds Morningstar tracked stood around $2.1 billion as of March 31. The Ohio-based firm now has some $750 million in assets, said Strive governance director Cory Skerl in a telephone interview on Friday.ĭespite challenging markets, "We’ve solidified a position as a fast-growing asset manager," Skerl said. Inflows to Strive accounted for the majority of net new deposits to anti-ESG funds in each of the three most recent quarters and the current one, according to Morningstar. mutual funds and ETFs faced outflows in seven of the nine months from July 2022 until March 2023. Stankiewicz cautioned other factors could be depressing flows however, including the funds' fees and mixed market performance that worked against many types of funds. "Investing against ESG principles can seem too restrictive for some people," she said.
Report co-author Alyssa Stankiewicz said in a telephone interview that most asset managers still see ESG risks, such as climate change, worth considering. She said the current trend "still seems like a drizzle" compared with the downpour of new money during the third quarter of 2022. Over April and May the funds took in $58 million, said Morningstar spokesperson Erin Parro. president.īut flows into Strive and other such firms have since slowed, Morningstar said in a new research paper and in additional data supplied on Friday.Īfter peaking at $377 million during the third quarter of 2022, more than five times the previous quarterly record, total net new deposits then fell to $188 million in the last three months of 2022 and were $183 million in the first three months of 2023. Strive co-founder Vivek Ramaswamy stepped down as executive chairman in February to run for U.S. Energy ETF (DRLL.P) took in more than $300 million in the month after it launched last August. One of the best-known funds, the Strive U.S. Republican politicians, often from energy-producing states, attack the growing attention paid to ESG factors by companies and investors. So-called "anti-ESG" funds have drawn attention as U.S. June 9 (Reuters) - (This June 8 story has been corrected to show figures cover 27 funds, not 26, in paragraph 12)įunds that market themselves as being opposed to environmental, social or governance (ESG) investment considerations have seen a fall-off in new investor deposits, research firm Morningstar said on Thursday.
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