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ESG funds experience first global net outflow (2024)
| Environmental, social, and corporate governance |
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| • What is ESG? • Enacted ESG legislation • Arguments for and against ESG • Opposition to ESG • Federal ESG rules • ESG legislation tracker • Economy and Society: Ballotpedia's weekly ESG newsletter |
Outflows from ESG funds, especially in America, created a global net ESG selloff last year for the first time in history:
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US fund clients withdrew a net $5.1 billion in the final three months of 2023, according to a fresh analysis by Morningstar Inc. published on Thursday. Combined with $1.2 billion of outflows in Japan, that was too severe a retreat for Europe’s $3.3 billion of net inflows to bolster the global market. In all, the global sustainable fund market experienced net redemptions of $2.5 billion in the fourth quarter, marking an historic low point for the industry. US skepticism toward ESG follows years of attacks by Republicans who accuse the strategy of being 'woke' and anti-capitalist. Legislators in New Hampshire have even sought to criminalize ESG. At the same time, investors have started to question the strategy’s staying power, after an extended period of poor financial returns on a relative basis. ESG fund withdrawals in the US coincided with a huge slump in traditional green stocks, with the S&P Global Clean Energy Index down more than 20% last year, compared with a 24% increase in the S&P 500. For the whole year, US investors redeemed a total of $13 billion from ESG funds, the Morningstar data show.[1] |
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Even in Europe, actively managed ESG funds experienced reduced inflows in Q4 2023 compared to the previous quarter:
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ETFs provided the bright spots for ESG asset gathering in the last quarter of 2023 as active strategies suffered considerable outflows, according to new research by Morningstar. … Morningstar said $3.3bn cumulative inflows across European ESG funds in Q4 was significantly down on the $11.8bn recorded in Q3. It added the decline was 'entirely attributable to actively managed sustainable strategies', which bled $18bn, while passive strategies welcomed $21.3bn in the final three months of the year.[1] |
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See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
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