Redemptions from Article 9 funds continued for the 6th consecutive quarter in Q1 as investors withdrew EUR 7.9 billion, according to new research from Morningstar.

However, in the first quarter of 2025, Article 8 funds saw EUR 52 billion of net new money – the highest inflows since late 2021 supported by increased subscriptions into fixed-income funds. Combined assets in Article 8 and Article 9 funds were down to EUR 6 trillion  representing 58% of the total EU fund market, as reported in Morningstar’s latest SFDR Article 8 and Article 9 Funds: Q1 2025 in Review.

Highlight of the report include:

• Article 6 funds, which represent a smaller portion (42%) of the EU fund universe, extended their dominance over flows, attracting EUR 112 billion in net subscriptions in the first quarter.

• Actively managed Article 8 funds continued their flow recovery by garnering EUR 43 billion. In contrast, inflows into passive Article 8 funds almost halved to EUR 9.6 billion.

• Newly incepted Article 8 and Article 9 funds, accounted for a reduced share (47% from 57%) of the total number of funds launched in the EU.

• Fund rebranding activity accelerated. At least 262 Article 8 and Article 9 funds with ESG-related terms in their names rebranded in the first quarter, including 185 that swapped terms and 75 that removed ESG-related terms from their names altogether, a notable uptick compared with the previous quarter.

• More name and portfolio changes will be reflected in the data in the coming months, beyond the May 21 deadline for the ESMA greenwashing rule.

Hortense Bioy, head of sustainable investing research at Morningstar Sustainalytics, said, “In the past 15 months, we estimate that over 470 Article 8 and Article 9 funds have rebranded, accounting for approximately 11% of funds in scope of the ESMA fund naming guidelines. Of these, less than 30% have dropped all ESG-related terms from their names. While this proportion may evolve in the coming months, it can be considered relatively limited. This means that asset managers in Europe remain keen to use fund names to signal ESG intentionality.

The resilience of fixed income continues to shine against an uncertain economic and geopolitical backdrop. With substantial inflows in the first quarter of 2025, fixed-income investments, particularly Article 8 bond funds, demonstrated their critical role in offering yield opportunities and defensive positioning for cautious investors amongst times of market uncertainty.”

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