Sage's Annual ETF Stewardship Survey Garners Record Number of Participants

Survey respondents represent over 80% of global ETF AUM

AUSTIN, Texas, Sept. 21, 2022 /PRNewswire/ -- Sage Advisory released the results of its 2022 ETF Stewardship Survey today. A record number of 23 ETF providers participated (up from 17 in 2021), including seven of the 10 largest U.S. ETF providers, managing $37 trillion in total assets. The survey results can be found here.

The fourth annual survey examines how well ETF providers (e.g., State Street, BlackRock, Invesco) perform their fiduciary duty on behalf of ETF investors. It includes questions about their voting practices, engagement activities, climate initiatives, and diversity and inclusion policies. Seven providers received an overall score of an "A" – three more than in 2021.

The survey's results revealed three emerging themes in the ETF industry. Sage noted that participant transparency was "restrained," which the firm attributes to increased regulatory scrutiny of "greenwashing," or the overselling of ESG credentials that could lead to fines.

"On the positive side, 'greenwashing' will hopefully become less pervasive in the industry and managers will err on the side of caution when tempted to overemphasize their ESG capabilities," said Bob Smith, President of Sage Advisory.

Another issue that could affect a core function of ETF stewardship is the proposed Index Act, which would allow ETF providers to pass on voting rights to the ETF investor.

"Some of the obvious challenges to the proposed Index Act are logging and tracking voting preferences of every retail investor, getting those preferences through multiple levels of custody, and a lack of quorums at annual shareholder meetings," said Emma Harper, Sage Senior Research Analyst and author of the report.

Lastly, Sage noted that 70% of managers incorporate Taskforce on Climate-Related Financial Disclosures (TCFD) standards in their processes. The use of the TCFD standards shows a high level of standardization in climate reporting that has long been sought by both proponents and opponents of the ESG investing movement.

"Reporting standardization will help providers bonify their ESG credentials, and the broad use of standards for climate reporting is a step in the right direction," Harper said.                                                    

Sage is an independent investment management firm headquartered in Austin, TX, that serves the institutional and private client marketplace with traditional fixed income asset management, ESG-integrated portfolios, global tactical ETF strategies, and liability driven investment solutions. As of June 2022, Sage manages and advises over $17 billion in client assets. For more information, visit sageadvisory.com.

SOURCE Sage Advisory Services

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