‘Lukewarm’ demand for US sustainable funds in July, report says

Aug 15 (Reuters) – Investors deposited $120 million into U.S. sustainable funds last month, a “tepid” amount of inflows that coincided with a broader withdrawal from mutual funds and ETFs, said the Morningstar Inc researcher (MORN.O) on Monday.

July marked the second consecutive month of net new deposits for sustainable funds, although they raised considerably less than the $492 million recorded in June, according to the company’s latest figures. Read more

Funds designated as “sustainable” by Morningstar include those that integrate environmental, social and corporate governance (ESG) factors into their investment processes.

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While “demand for sustainable funds remained tepid in July,” Morningstar said in the report that “their recent weakness is not surprising as investor appetite across the board has eroded.”

Investors withdrew $13 billion in total from long-term U.S. mutual funds and ETFs in July, the fourth consecutive month of outflows, according to Morningstar.

It’s the longest streak of net drawdowns since Morningstar began tracking the data in 1993, as investors grapple with stock market volatility and worries about inflation and interest rate hikes. interest.

After a bumper year in 2021, funds that consider ESG criteria struggled during the market sell-off earlier this year, with widespread underperformance and weaker demand. Read more

Sustainable funds brought in $8.9 billion in the first seven months of the year, a sharp drop from the $45.1 billion they attracted in the same period in 2021, said Morningstar.

These funds gained new prominence last year as extreme weather, events highlighting social injustice and shareholder activism pushed ESG issues to the top of investors’ agendas. Read more

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Reporting by Cole Horton in New York; Editing by Aurora Ellis

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