Amid the growing backlash to ESG investing, several anti-ESG funds were launched. Yet, these haven’t seen a significant surge in terms of inflows or returns that would indicate that the category will have long-term success.

According to Morningstar, inflows into these funds peaked in the third quarter of 2022 at $377 million but have dropped by more than 50% to $183 million in the first quarter of the year. 

Currently, there are 5 types of anti-ESG funds. Some are political and favor companies that are penalized by ESG factors. Another type are vice funds which invest in ‘sin’ stocks related to alcohol, tobacco, and firearms. There are also voter funds which look to vote against any ESG initiatives. Finally, the largest category are funds that previously used ESG factors for investment decisions but no longer do so. 

The biggest player in the anti-ESG market is Strive Asset Management, which was founded by Republican presidential candidate Vivek Ramaswamy and aims to compete with Blackrock and Vanguard. Its first fund saw strong demand but later funds have seen minimal enthusiasm with an average of $5 million of inflows. 

Finsum: Anti-ESG is an investing theme that launched last year, and many believed had potential. So far, there are limited signs that it's showing significant traction.