There has been an uptick in the money flowing into sustainable funds in the US in the second quarter of this year, with the inflows positive for the first time since 2022, according to data from Morningstar.
Figures from its Global Sustainable Fund Landscape report found that there were almost $3bn of net inflows into US sustainable funds, which it said was driven largely by passive investment strategies.
This comes after a significant backlash in the US against sustainable and ESG strategies in recent years, following the re-election of Donald Trump as US president.
This was part of a wider picture that show an increase of money into sustainable funds globally. The Morningstar data shows sustainable funds attracted an estimated $3.7bn (£2.8bn) in net inflows during this period.
Morningstar found that Europe remained the largest contributor to inflows, attracting $3.5bn despite a slowdown from the previous quarter.
As in the US, passive sustainable strategies continued to dominate, attracting $11.4bn, while active sustainable funds experienced net outflows of $7.8bn.
Elsewhere, sentiment remained weaker, with Canada, Japan and Australia/New Zealand all recording net outflows during the quarter.
Morningstar said that overall global sustainable fund assets rose to an estimated $3.73tn at the end of the quarter, up from $3.50tn at the end of Q1, largely reflecting market appreciation rather than new investor money.
Morningstar director of UK manager research Monika Calay says: “The second quarter shows that demand for sustainable funds remains highly selective. Europe stayed in positive territory, but inflows slowed from the first quarter and were again concentrated in passive strategies and fixed income, while sustainable equity funds continued to see pressure.
“The US sustainable fund market saw a reversal in Q2, with inflows returning after 14 consecutive quarters of outflows. Again, passive strategies drove the recovery, as investors remain mostly interested in sustainable exposures when they are delivered through low-cost, index-based vehicles.”
Morningstar added that product development remained subdued during the quarter, with 32 new sustainable funds launched globally, including 13 in Europe and three in the US.
