Flows into global sustainable funds slow in Q3 as AUM drops 4.2%
The challenging macroeconomic backdrop and falling stock valuations have largely contributed to the reduction in flow volumes and assets, Morningstar said.
Funds attracted $13.7bn in the third quarter, down from $23.7bn inflows in the Q2, according to Morningstar's latest Global Sustainable Fund Flows report.
Assets under management were also impacted, dropping by 4.2% between the two quarters to $2.7trn. Morningstar noted, that the global mutual fund and ETF market's assets also declined by 5% during the period.
The challenging macroeconomic backdrop and falling stock valuations have largely contributed to the reduction in flow volumes and assets, the firm said.
Morningstar: Over 60% of active bond managers outperform passive rivals
Despite this, European sustainable funds remained resilient and gained $15.3bn of net new money over the third quarter. Although much lower than the revised $25.4bn total net new money attracted in the previous quarter, sustainable fund flows contributed more than two-thirds of the overall European fund flows.
The same could not be said for sustainable funds in the US, as investors have pulled $2.7bn from this type of portfolio during the quarter.
Overall, Europe accounted for 84% of global sustainable fund assets and remained the most developed and diverse ESG market globally, followed by the US, which housed 11% of assets.
Yet, Morningstar highlighted a growing number of companies in the US have been removing ESG-related terms from their names, a phenomenon which the firm said has not been registered in Europe.
However, the data provider noted there has been a continued slowdown in product development amid greenwashing accusations and regulatory tightening in the space, with fewer
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