Global investments in sustainable funds plummet amid fears of looming recession, Morningstar says

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Uploaded: 2022-07-29T10:53:51.000Z
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Inflows into sustainable funds reached US$32.6 billion in the second quarter, down 62 per cent

The global fund universe suffered outflows of US$280 billion in the three-month period, Morningstar said in a report

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Net inflows into sustainability-themed funds reached US$32.6 billion in the second quarter, down 62 per cent compared to the first three months of 2022. Photo: Shutterstock

Martin Choi

Published: 6:53pm, 29 Jul 2022

Global investments in funds with a sustainable focus plummeted amid fears of a looming recession, but still held up better than their peers in the broader market, according to funds researcher Morningstar.

Net inflows into sustainability-themed funds reached US$32.6 billion in the second quarter, down 62 per cent compared to the first three months of 2022, according to the asset manager’s tally of 6,709 funds with a strong focus on environmental, social and governance (ESG) factors.

Meanwhile, the global fund universe suffered outflows of US$280 billion in the three-month period, after registering net inflows of US$141 billion in the first quarter of the year, Morningstar said in a report on Thursday.

“Amid investor concerns over a global recession, inflationary pressures, rising interest rates, and the conflict in Ukraine, sustainable funds’ net inflows plummeted in the second quarter, [but still] fared better than the broader market,” said Hortense Bioy, Morningstar’s global director of sustainability research, in a statement on Friday.

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Data released on Thursday showed that the US economy shrank from April through June for a second straight quarter, contracting at a 0.9 per cent annual pace and raising fears of a looming recession.