Global sustainable funds attracted $22.5bn of net new money in Q3, less than the revised $33.9bn of inflows in the second quarter., according to the latest quarterly Global Sustainable Fund Flows report, which examines recent activity in the global sustainable fund universe and details regional flows, and assets.
By contrast, the overall global fund universe suffered outflows of $198bn in the third quarter of 2022, after suffering $278bn of outflows in the second quarter.
Meanwhile, global sustainable fund assets slipped to $2.24trn at the end of September, from $2.28trn in June, although as Morningstar noted the 1.6% drop was less pronounced than the 7.5% decline for the broader market.
“Sustainable funds are not immune to the global macro environment,” said Hortense Bioy (pictured), global director of sustainability research at Morningstar.
She added, “ot only has it been a turbulent year for all investors, but a trying one also for sustainability-focused investors who’ve had to deal with being underweight in fossil fuel companies, greenwashing concerns, and growing politicisation of ESG in the US.
So far this year, flows into sustainable funds have proven more resilient than those into traditional funds. Investors in sustainable strategies tend to focus on the long-term and are less inclined to pull their money out in jittery markets.”
Breaking it down geographically, Europe’s sustainable assets were almost level with Q2’s figure at around $1.85trn – while the wider fund universe saw assets drop 10%.
However, the number of new sustainable funds hitting the shelves almost halved from 161 in Q2 to 82 in Q3.
Passives were the biggest winners in Europe, with nearly almost all – 96% – of the $22.6bn inflows in these strategies.
Sustainable equity and allocation funds suffered the most in Q3, said Morningstar, with half the previous quarter’s inflows.
However, this still beats the “staggering outflows” of $70bn conventional equity funds endured, it added.
In the US, following its first quarter of outflows in more than five years, sustainable funds were back in positive territory in Q3 with inflows of £439m.
While a marked difference from the record flows of $21.6bn recorded in the first quarter of 2021, this was still a positive figure when compared to the wider market that saw outflows of $86bn for Q3.
