Global sustainable funds attracted $32.6bn in Q2 2022 down 62% on the $87bn in Q1, according to Morningstar.
Morningstar, in its quarterly Global Sustainable Fund Flows report, says that despite concerns over a global recession, inflationary pressures, rising interest rates, and the conflict in Ukraine, sustainable funds fared better than the broader market, which experienced $280 billion of net outflows over the same period.
Other findings of the report include:
• In Q2 2022, the European sustainable universe attracted close to USD 31 billion in net flows, a 57% drop over the readjusted 71.7 billion net inflows in the first quarter. This was the lowest quarterly net purchases of sustainable funds since the pandemic started.
• Global sustainable fund assets slipped to USD 2.47 trillion. The 13.3% quarterly fall was less pronounced than the 14.6% decline for the broader market.
• U.S. sustainable funds had $1.6 billion of outflows in Q2 2022, their first quarter of outflows in more than five years. Actively managed sustainable funds accounted for the majority of the group’s loss, with $1.2 billion of outflows.
• Together with market depreciation, assets in U.S. sustainable funds fell to $296 billion, their lowest point since the first quarter of 2021, and a 17% decline from the all-time record of $358 billion at the end of 2021. By comparison, assets in the broader U.S. market also peaked at the end of 2021 (at $28 trillion) and slid by 19% to $22.8 trillion at the end of Q2 2022.
• On an annual basis, the sustainable funds market grew 13% during the trailing 12 months, while the total market grew modestly by 1.4%. This continued growth, even during a period of poor market performance, could signal that investor demand for sustainable funds is more resilient than broader U.S. demand.