Funds attracted $13.7bn in the third quarter, down from $23.7bn inflows in the Q2, according to Morningstar’s latest Global Sustainable Fund Flows report.
Assets under management were also impacted, dropping by 4.2% between the two quarters to $2.7trn. Morningstar noted, that the global mutual fund and ETF market’s assets also declined by 5% during the period.
The challenging macroeconomic backdrop and falling stock valuations have largely contributed to the reduction in flow volumes and assets, the firm said.
Despite this, European sustainable funds remained resilient and gained $15.3bn of net new money over the third quarter. Although much lower than the revised $25.4bn total net new money attracted in the previous quarter, sustainable fund flows contributed more than two-thirds of the overall European fund flows.
The same could not be said for sustainable funds in the US, as investors have pulled $2.7bn from this type of portfolio during the quarter.
Overall, Europe accounted for 84% of global sustainable fund assets and remained the most developed and diverse ESG market globally, followed by the US, which housed 11% of assets.