Sustainable investment products have continued their winning streak, attracting half of all the new money entering European funds during the first three months of the year.
According to Morningstar, European sustainable investment funds posted net inflows of €120bn during the first quarter — some 18% higher than the final three months of last year. The new money gathered represented 51% of the €233.5bn which flowed into all European investment funds between January and March.
Europe was the top region for sustainable inflows, accounting for 79% of the amount registered globally during the first quarter. Sustainable funds in Canada, Australia, New Zealand, Japan and Asia gathered $17bn between them.
European inflows were driven by “continued investor interest in ESG issues, especially in the wake of the Covid-19 crisis”, said Morningstar.
“The disruption caused by the pandemic has highlighted the importance of building sustainable and resilient business models based on multistakeholder considerations,” it added.
Funds with a focus on climate change issues were among the best-sellers.
BlackRock was the biggest winner, gathering €17.1bn across its sustainable investment products between January and March. The world’s largest asset manager was followed by UBS and Amundi, which pulled in €7bn and €6.4bn respectively across their sustainable funds.
The bumper inflows take total assets under management across European sustainable funds to a record high of €1.3tn — up 17.5% on the final three months of 2020.
Hortense Bioy, global director of sustainability research at Morningstar, said: “2021 began where 2020 left off, with European investors continuing to pour vast amounts of money into ESG funds.
Last month saw the roll-out of Europe’s Sustainable Finance Disclosure Regulation, which imposes strict disclosures and a requirement to categorise funds by their ESG record.
One of the more onerous tasks for asset managers has been to sort funds into different categories — Article 6, Article 8 and Article 9 — based on their sustainable investment approach.
Separate analysis by Morningstar, published in March, showed that out of 11,500 open-end funds and ETFs domiciled in Luxembourg, funds classified as Article 8 or 9 represent up to 21% of total European funds, and up to 25% of total European fund assets.
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