Q1 2024 has seen capital flows into funds categorised as Article 8 under the EU’s Sustainable Finance Disclosure Regulation (SFDR) rebound, as Article 9 funds bled money for the second consecutive quarter. New research published by data provider Morningstar noted that Article 8 funds netted €14 billion (US$14.9 billion) in new money, driven by fixed income and passive strategies following three quarters of outflow. Meanwhile, Article 9 funds registered outflows of almost €4 billion. Article 6 funds, however, demonstrated the strongest flow performance over the past five quarters, collecting €43 billion in net subscriptions in Q1 2024. Combined assets in Article 8 and 9 funds grew by 4% to hit €5.5 trillion by the end of the quarter. “Article 8 funds are attracting money again after a year of redemptions, but they’re still trailing the rest of the market,” said Hortense Bioy, Global Director of Sustainability Research at Morningstar. “While active ESG managers are licking their wounds, passive ESG investments continue to appeal to more investors.” A separate report published by the Association for Financial Markets in Europe (AFME) noted that ESG bond and loan issuance increased by 2% compared to Q1 2023. This was largely driven by sustainability-linked loans, which saw a 13% year-on-year (YoY) increase, AFME said. However, sustainability-linked bonds exhibited a 34% YoY decrease to €7.8 billion.
