By Patturaja Murugaboopathy and Anurag Maan
October 29 (Reuters) – Global sustainable mutual fund assets hit an all-time high at the end of the third quarter, bolstered by new disclosure rules in Europe, although the pace of net inflows has slowed from the quarter previous, according to Morningstar data.
Funds focused on environmental, social and governance (ESG) issues saw their combined assets climb to $ 3.9 trillion in late September, data showed.
This growth is mainly due to a significant increase in the number of funds meeting Morningstar’s “sustainable investment” criteria in Europe following the introduction of the Sustainable Finance Disclosure Regulation (SFDR) on March 10, he said in a report.
The number of sustainable funds captured in Morningstar’s global sustainable universe increased by more than 51% in the third quarter, reaching 7,486 funds at the end of September, according to the report.
According to SFDR, companies, including fund management companies, insurers and pension funds that provide financial products or services in the European Union, will need to start revealing how sustainable they really are.
The SFDR aims to help invest 1,000 billion euros ($ 1.2 trillion) in green investments over the next decade, eliminate the uneven climate information currently provided by financial market players and an advantage for companies offering truly sustainable products.
However, flows to sustainable funds fell to $ 144 billion in the third quarter, down 14% from the previous quarter.
European sustainable funds continued to take the lion’s share of net inflows to $ 108.7 billion, while the United States and Asia ex-Japan attracted $ 15.7 billion and $ 0.9 billion respectively. dollars.
âOne of the main reasons for the decline in flows to durable assets is the broader global trend of declining flows in the third quarter,â said Craig Jonas, CEO of impact investment firm CoPeace.
âWe expect a continued increase in assets and flows to sustainable funds throughout the year. This is reflected in the growing proportion of assets under management incorporating ESG criteria.
Sustainable fixed income funds attracted $ 30.8 billion in the third quarter, up 22% from the previous quarter, amid inflation concerns and uncertainty surrounding interest rate hikes .
In contrast, sustainable equity funds raised $ 55 billion, 23% less than in the second quarter.
(Report by Patturaja Murugaboopathy and Anurag Maan in Bengaluru, edited by Mark Potter)