European sustainable funds cashed in almost US$11 billion of inflows in the first quarter of this year – more than double than in Q4 2023, according to Morningstar’s latest global sustainable fund flows review. This uptick was in stark contrast to the US, which experienced its worst-ever quarter, with record outflows of US$8.8 billion. Europe houses 84% of global sustainable fund assets, while the US is home to only 11%. Sustainable open-ended and exchange-traded funds rebounded slightly in Q1 globally, drawing in nearly US$900 million of net new money – compared to small, restated outflows of US$88 million in Q4 2023. Similarly to the US, Japan’s sustainable funds posted outflows totalling US$1.7 billion. The number of new sustainable fund products also continued its downward trajectory, with only 97 sustainable fund launches in the first quarter of this year – down from 176 in Q4 2023. “Sustainable funds have been facing many headwinds in the past couple of years, including elevated energy prices, high interest rates, and an ESG backlash in the US,” said Hortense Bioy, Global Director of Sustainability Research at Morningstar. “The modest inflows into sustainable funds in Q1 2024 reflect caution ahead of key elections in the US and Europe, which will determine the pace of future green policies and encourage – or discourage – more sustainable practices.”
Investors pulled a record $8.7 billion from US #sustainablefunds in Q1.
Although the motivations behind outflows cannot be perfectly quantified, many factors are in play, such as high #interestrates and greenwashing concerns. Get the full recap 👇 https://t.co/Kxew2SiRKt
— Morningstar, Inc. (@MorningstarInc) April 25, 2024
