Number of climate-focused funds surges 600% in the past five years
Total assets within the funds has also surged, partly as a result of the product development, to around 30% in the past 18 months, now at $534bn.
Its fourth annual Investing in Times of Climate Change paper, which explores the progression of climate themed funds, found that as of June 2023, there were 1,407 open-ended and exchange-traded funds with a climate-related mandate. This compared with fewer than 200 portfolios five years ago.
Total assets within the funds had also surged by around 30% in the past 18 months to $534bn, partly as a result of the product development.
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Hortense Bioy, global director of sustainability research at Morningstar, said the growth of this sector since 2018 was «simply remarkable and reflects the growing awareness of the investment risks and opportunities arising from climate change».
According to the report, Europe remains the hotspot for climate themed investments, with the «largest and most diverse climate fund market», which accounts for 84% of global assets. This is followed by China and the US, with 8% and 6% market share, respectively.
The US' flow of new climate themed products was particularly stunted by the backdrop of high oil and gas prices and falling valuation of renewable energy stocks over the past 18 months, Morningstar argued, with assets in US climate funds up just 4% in the period, to $31.7bn.
There was an overall slowdown of the launch of new climate funds in the past year, which Morningstar said matched the wider market trend of fewer new products coming to market.
Morningstar defines climate funds included in the study by «intentionality» as opposed to its holdings.
«Many sustainable
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