Invesco has secured record-breaking seed funding for an ETF from Finnish pension insurer Varma, marking the latest example of Scandinavian institutions choosing the wrapper for their sustainable allocations.

The US-listed Invesco MSCI Global North America Climate ETF (KLMN) has received $2.4bn funding from Varma, the highest seed funding for an ETF.

The move follows Finnish pension fund Ilmarinen deciding to rotate $2bn into the Xtrackers MSCI USA Climate Action Equity ETF (USCA) in 2023.

Shortly before Ilmarinen invested a combined $3bn in the US-listed iShares Climate Conscious & Transition MSCI USA ETF (USCL) and the iShares MSCI Japan Climate Action ETF (2250).

Ilmarinen’s senior portfolio manager Juha Venäläinen previously told ETF Stream the firm prefers ETFs that trade the same hours – or have the same closing time – as the underlying equities.

Venäläinen said they also expect US liquidity to be better in the US “if the product catches up”.

Scandinavian pension funds continuing to opt for US-listed ESG ETFs could also underline concerns about T+1 misalignment between continents.

In fact, while US securities now settle on a T+1 basis, the EU is not set to move to the shorter settlement cycle in 2027.

The European Securities and Markets Authority (ESMA) found that after North America's move to T+1, the average premiums paid over the net asset value (NAV) of EU domiciled ETFs rose 33% between Q1 and Q3 this year.

However, there is still appetite from pension funds and insurance companies for UCITS ETFs, with these investors contributing to a quarter of BlackRock's ETF inflows last year.