Global ESG and sustainable funds post first net quarterly outflow on record
Europe, the largest market for sustainable funds, saw a decrease in net inflows in the fourth quarter, attracting only $3.3bn.
According to Morningstar's latest Global ESG Flow report, the outflows from sustainable funds echoed with the substantial redemptions from the broader market open-ended funds and ETFs during the final three months of the year.
Europe, the largest market for sustainable funds, saw a decrease in net inflows in the fourth quarter, attracting only $3.3bn compared to the revised figure of $11.8bn in the previous three months.
This was thanks to passive funds, which collected $21.3bn, while actively-managed sustainable strategies shed close to $18bn.
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Meanwhile, outflows from US sustainable funds surged to $5.1bn, almost double from the revised $2.7bn in the previous quarter.
«The disappointing reality is that active managers failed again to prevent redemptions in a corner of the market where it is easier for them to prove their worth,» said Hortense Bioy, global director of sustainability research. «By contrast, passive funds demonstrated consistent resilience.»
Supported by stock and bond price appreciation, global sustainable fund assets rose by 8% over the last quarter to almost $3trn at the end of December. Over the full year, global sustainable funds gathered $63bn, compared with $161bn in 2022.
Throughout 2023, European sustainable funds attracted over $76bn, nearly half the annual net inflows of $149bn recorded in 2022. In contrast, however, conventional European funds bled $50bn.
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According to Morningstar, there were several factors contributing to the lower inflows into
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