Sustainable equity UCITS have demonstrated resilience with positive net inflows despite market volatility and economic uncertainties, according to the European Fund and Asset Management Association (EFAMA). In the latest edition of its market insight series, EFAMA observed that while net inflows were lower in 2022 and 2023 (compared to 2021 when they amounted to €231 billion), demand for the funds remained strong compared to global trends – highlighting investor confidence in sustainable investments. “Sustainable equity UCITS not only encompass a wide range of sustainability themes catering to varied investor preferences, but are also a resilient investment product with competitive returns,” said Vera Jotanovic, Senior Economist at EFAMA. “This makes them an attractive option for investors.” Sustainable equity UCITS comprised 24% of total sustainable UCITS last year, up from 15% in 2019. The net assets of these funds have more than doubled over the past five years, increasing from €0.6 trillion to €1.3 trillion, according to EFAMA. Almost 20% are classified as Article 9 funds under the Sustainable Finance Disclosure Regulation (SFDR), while 70% are Article 8 – reflecting cautious investor sentiment amidst regulatory uncertainties, the association noted, adding that the ongoing review of the regime is expected to provide clearer definitions and support for transition finance. “As the regulatory landscape evolves, we expect the sustainable finance framework to become more investor-centric [and] resolve inconsistencies with other EU regulations, further driving sustainable progress and achieving the EU’s long-term sustainability goals,” said Anyve Arakelijan, Policy Advisor at EFAMA. On average, sustainable equity funds have consistently delivered positive net performances – comparable to non-sustainable equity UCITS. “These funds tend to be cost-effective, benefitting investors with sustainability preferences,” the report noted.
