Posted inESG

European sustainable funds surpass €625bn

European funds saw assets in sustainable products rise by 6% to €626bn between Q2 and Q3 2019, Morningstar data has revealed.

This compares with a growth rate of 2.6% for the overall European fund universe.

Hortense Bioy, director of passive strategies and sustainability research, Europe at Morningstar, commented: “Continuously strong flows into sustainable funds in Europe are evidence that investors are increasingly putting their money where their mouth is.

“Many surveys and studies on the topic show that investors are interested in sustainable investments but are not turning their interest into action.

“Our data proves that the gap between interest and action is narrowing.”

Money pouring in

And Bioy is not wrong.

Year-to-date, €70.4bn has been invested in sustainable funds, representing 39% of total flows into European funds.

Demand for sustainable equity funds remained solid at €12.5bn over the quarter, in contrast with traditional equity funds which Morningstar describes as continuing to “bleed assets”.

They reported outflows of €14.8bn in Q3 and €39.4bn in Q2.

Less money pouring into sustainable fixed income and allocation funds during the third quarter, however, saw total flows dip to €24.9bn from €29.8bn.

There were 93 sustainable offerings launched during the three-month period, taking the total to 252 for the year so far and 2,324 sustainable funds domiciled across Europe.

Making up ground

The sustainable fund universe lags traditional funds, in terms of attracting assets, but it is gaining ground.

But one area where its stands at a particular disadvantage is fixed income.

According to Morningstar: “2019 has been the year of fixed income, and the sustainable fund universe has not benefitted from this trend to the same extent as the traditional fund universe mainly due to a lack of sustainable fixed-income offerings.”

It highlighted US government bond funds, which are not available in ESG form.

Kirsten Hastings

Kirsten is international editor of Expert Investor and International Adviser. She joined Last Word Media in October 2015. Kirsten has a Masters in Financial Journalism from the...

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