Article 9 funds receive lowest inflows on record as Article 8 products face outflows
Despite poor inflows, Article 9 funds saw the best performance of any classification, rising 1.2% organically throughout the quarter, compared to Article 8 and Article 6’s 0.3% shrinkage.
Assets in Article 8 and Article 9 funds rose by 1.4% over the quarter, despite the former losing €14.6bn in outflows, while the latter raised their lowest inflows (€3.6bn) since the introduction of SDFR in 2021.
Data from Morningstar's SFDR Article 8 and Article 9 Funds: Q2 2023 in Review report revealed that despite the poor inflows, Article 9 funds saw the best performance of any SFDR classification, rising 1.2% organically throughout the quarter,.
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The report noted a «stronger presence of passive strategies» in sustainable funds over the last quarter, with the Article 8 Goldman Sachs Enhanced Index Sustainable Global Equity fund gaining €3.2bn alone.
Morningstar also said the outflows from Article 8 funds «disproportionally affected the Article 8 funds with no commitment to sustainable investments», with one third of outflows coming from such funds.
The report also found that reclassifications of funds, which surged following new guidelines over SFDR, had slowed, with only six funds downgrading from Article 9 to Article 8 throughout the quarter, while 180 funds upgraded from Article 6 to Article 8.
In total, almost half of all funds launched in the EU throughout Q2 were Article 8 or 9, with 161 funds being launched across the three months.
Morningstar said the number of launches showed «little change» from the previous quarter but warned of a potential period of «continued slowdown in product development activity».
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