Fund flows into global sustainable funds saw a 62% drop in the second quarter of the year, but still fared better than the broader market, data from Morningstar has revealed.
According to the Morningstar Global Sustainable Fund Flows report, versus inflows of $87bn (£72bn, €85bn) in the first quarter of 2022, global sustainable funds attracted $32.6bn of net new money in the second quarter.
Over the same period, amid concerns over a global recession, the conflict in Ukraine, the overall global fund universe suffered outflows of $280bn.
While faring better, Sylvester Flood, senior editorial director at Morningstar., said the slump of net new money into sustainable funds was felt in all regions.
“Some parts of the world even experienced outflows,” said Flood. “US-domiciled funds bled $1.6bn, their first quarter of outflows in more than five years.”
Geographic trends
Together with market depreciation, assets in US sustainable funds fell to $296bn, their lowest point since the first quarter of 2021 and a 17% fall from the all-time record of $358bn at the end of last year.
Europe meanwhile, which is the biggest market for sustainable funds, registered a 57% drop in net new money.
“The $31bn that European investors put into sustainable products in the second quarter was the lowest net purchase of sustainable funds since the first quarter of 2020 when the coronavirus struck,” Flood said.
In total, global sustainable fund assets slipped 13.3%, from $2.84trn at the end of the first quarter to $2.47trn at the end of June. Morningstar said this was the largest drop since the first quarter of 2020 and was roughly in line with the net asset base of a year ago.
“Nevertheless, sustainable fund assets held up better than the overall global fund market, which saw its assets shrink 14.6% in the three months through June 2022,” said Flood.
