Net inflows into global sustainable funds plunged in the second quarter amid concerns about sticky inflation, rising interest rates and a potential recession though some Asian markets, notably Taiwan and South Korea, were buoyed by investor interest in sustainability-themed exchange-traded funds, according to Morningstar Inc.
Investors poured a net US$18 billion into global sustainable funds in the three months to June, down 42% from around $31 billion in the first quarter, and an steeper 55% decline from $40 billion in the fourth quarter of 2022.
“The second quarter saw reduced inflows as a result of the continuously challenging macro backdrop,” Hortense Bioy, global director for sustainability research at Morningstar, says in a statement on August 3.
In the Asia ex-Japan region, net inflows of roughly $172 million were driven by Taiwan-domiciled sustainable ETFs, which attracted a record $307 million.
Meanwhile, Korean sustainable funds saw $20 million of net inflows in April through June, ending four consecutive quarters of outflows.
Inflows into passive sustainable funds offset outflows from active funds. The top five funds with the largest inflows were all ETFs, including Mirae Asset Tiger Secondary Cell ETF.
Over in Europe, Biyo says environment, social and governance funds attracted net new money despite a slowdown in product development, concerns over greenwashing, and “an ever-evolving regulatory environment.
Morningstar’s figures show that there were 7,426 sustainable funds globally as of June 2023 with $2.83 trillion of combined assets, down 5.67% from a record high $3 trillion in December 2021.
