ESG funds rose during COVID-19 sell-off

 — 1 minute read

Sustainable funds pulled US$45.6 million ($69.7 million) in net inflows during the first quarter, while the overall fund universe copped outflows of US$384.7 billion ($588 billion), according to new research.

A Morningstar report has stated ESG funds showed resilience during the COVID-19 sell-off, with global sustainable fund assets standing at US$841 billion as at the end of March, down 12 per cent from a record high of US$960 billion at the close of 2019. 

Assets in the global fund universe had taken a greater hit, declining by 18 per cent. 


But sustainable fund assets in Asia ex-Japan were up 21 per cent to US$7.7 billion, bolstered by new fund launches. 

Australasian sustainable funds attracted inflows of US$319 million, with the inflows split roughly evenly between active and passive strategies. 

Russell Investments and Australian Ethical accounted for most of the inflows during the quarter.

Meanwhile, as 102 new offerings were launched during the first quarter overseas, product development in the Australasian market was said to dry up. 

There were no sustainable fund launches during the quarter, despite a “flurry” of new offerings during 2018 and the first half of 2019.

However, Morningstar noted the sustainable funds group does not represent the growing number of funds that now formally consider ESG factors in a nondeterminative way in their stock selection.

Europe was reported to continue to dominate the sustainable space, housing 76 per cent of global offerings and 81 per cent of assets, but investor interest in other regions is growing, Morningstar said. 

The US accounted for a higher proportion of global inflows compared with previous quarters.


ESG funds rose during COVID-19 sell-off
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on [email protected].


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