Sustainable bond funds shed £653m in H1 2023 as ESG equities add £10.3bn
Netting £4.5bn, Equity Global funds were the most popular sustainable classification, followed by US and emerging market equity.
While inflows have been strong year-to-date for non-sustainable bond funds, netting £9.5bn, sustainable bond funds saw outflows of £653m.
«Investors are clamouring for fixed income but, for whatever reason, that enthusiasm does not extend to sustainable funds,» said Dewi John, head of research, UK and Ireland for LSEG Lipper.
«We have previously speculated that the paucity of bond ESG flows was down to the fact that passive funds are taking all of the fixed income pie, and sustainable funds suffer from being mainly actively managed vehicles. Mainly, but not exclusively.»
Fixed income in H1: 'Year of the bond' looks more like 'year of the coupon'
Beyond fixed income, all other sustainable asset classes were in the black. Excluding money market vehicles, sustainable funds took £10bn for the first half of the year, while conventional funds saw outflows of £6.4bn.
Inflows were particularly strong for sustainable equity funds, which brought in £10.3bn, while its conventional peers shed £20.3bn.
Other sustainable asset classes that beat their conventional equivalents in terms of flows were alternatives (£30m versus -£1.77bn for conventional funds), money market (£1.23bn versus -£43.25bn), and real estate (£121m versus -£1.03bn).
While sustainable mixed asset funds had positive flows of £234m, they trailed well behind their conventional peers, which took in £6.6bn.
Netting £4.5bn, equity global funds were the most popular sustainable classification, followed by US (£2.6bn) and emerging market equity (£899m). Conventional equity US funds saw withdrawals of £5.8bn over the period.
Only 2% of funds
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