China’s sustainable funds post huge inflows amid push to meet carbon targets, Morningstar says
- Net inflows into China’s sustainability-themed funds reached US$7.6 billion in the third quarter versus a net outflow of US$928.9 million in the second quarter
- Overall, assets under management of ESG funds in China hit US$47.5 billion in the third quarter, up 33 per cent from the previous quarter
Net inflows into sustainability-themed funds in the mainland grew to US$7.6 billion in the third quarter, reversing from a net outflow of US$928.9 million in the second quarter, according to the asset manager’s tally of 127 domestic funds with a strong focus on ESG factors.
“As one of the hottest themes this year, renewable energy stocks have surged since the second quarter of 2021, leading many funds investing in related areas to outperform the market, some of which have attracted significant inflows year to date,” said Chen.
Overall, assets under management of ESG funds in China reached US$47.5 billion in the third quarter, growing 33 per cent from the previous quarter.
Orient Secs Green Energy Car Allocation fund, for example, saw its assets under management increase to over 20 billion yuan (US$3.1 billion) as of September 30, a more than fourfold increase from the end of 2020, according to Chen.
“Many local fund companies see carbon neutrality as one of the long-term growth themes and therefore have launched or are planning to launch climate-aware funds to meet the growing demand,” Chen said.
Investors were increasingly seeing the benefits of integrating sustainable investing approaches into their portfolios, according to Swiss bank UBS’s Investor Sentiment Survey released at the end of October.
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Over three quarters of investors expect sustainable investing returns to match or exceed traditional investing returns, according to the global survey of 3,004 investors and 1,202 business owners across 15 markets, including mainland China, Hong Kong, the US and the UK.