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Assets in IShares ESG fund drop 91% after biggest investor reduces ownership

Stock Markets Dec 30, 2021 11:50PM ET

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Assets in IShares ESG fund drop 91% after biggest investor reduces ownership

© Reuters. FILE PHOTO: The BlackRock logo is pictured outside their headquarters in the Manhattan borough of New York City, New York, U.S., May 25, 2021. REUTERS/Carlo Allegri 2/2

(Reuters) -The iShares ESG MSCI EM Leaders ETF suffered heavy outflows this week, according to public data, leading to a tenfold drop in the assets managed by the exchange-traded fund focused on sustainable emerging-market companies.

Finland's Ilmarinen Mutual Pension Insurance Company owned 13 million shares in the ETF in September, making it the No.1 investor in the fund at the time, Refinitiv data shows.

Senior portfolio manager Juha Venalainen from Ilmarinen told Reuters that Ilmarinen has significantly reduced holdings in the ETF.

"We decided to reduce our exposure to equities in emerging markets. Our view is that risks in that area may have increased," Venalainen said and added the transaction surely decreased capital in the fund.

"We are by no means disappointed with the ETF, the decision was purely allocative," he said.

The number of outstanding shares in the fund, which has underperformed its benchmark and whose top three holdings are Taiwan Semi, Tencent and Alibaba (NYSE:BABA), fell over 91% to 1.2 million as of Monday from 13.9 million as of Dec. 22.

The fund now manages around $74 million worth of net assets, compared to ten times more earlier this month.

BlackRock (NYSE:BLK), the world's biggest money manager which owns iShares, did not immediately respond to a request for comment.

The fund rose 0.9% by 1516 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, is down 0.6%.

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Comments (3)

elias skaff Dec 30, 2021 10:21PM ET

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ESG ETF is for hypocrites only.

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Chad RicherThanYou Dec 30, 2021 1:16PM ET

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Buy when others are fearful. I just made 400% on BABA calls

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Robert Copeland Dec 30, 2021 1:16PM ET

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Private joke between Black rock and me.

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Robert Copeland Dec 30, 2021 12:21PM ET

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Not good, not good at all. I'm so glad I'm not in that oneyet.

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