European sustainable fund flows lead 2022 charge

sustainable fundsEuropean investors were the biggest contributors to sustainable investments in 2022, according to data by iShares that showed a vast gulf between flows in Europe versus those of the US.

Throughout the year, $54 billion was added to Emea-listed sustainable ETPs, whereas US-listed sustainable ETPs experienced total flows of just $5 billion.

Even though sustainable ETPs were a popular choice among European investors, contributions to the asset class were lower in 2022 than in the previous year.

In 2021, Emea-listed sustainable ETPs experienced total flows of $100 billion, which was $46 billion greater than total flows in 2022. Similarly, US-listed sustainable ETPs also experienced a decrease, from $39 billion in 2021 to $5 billion in 2022.

Investors continued to favour sustainable products in 2022, as buying was mainly driven by ESG-optimised strategies, which recorded net inflows of $12 billion throughout the year.

From mid-October onwards, sustainable fixed income flows saw a significant increase. In the last two months of 2022, $6 billion was added to the asset class.

This aligns with data from ETFGI, that reported an increase of 6.2% in net inflows in October across the global ETF industry.

Within sustainable fixed income flows, ESG best-in-class strategies were the most popular, with $19 billion added throughout the year.

Also, in Europe, total flows into equity decreased by $45 billion. In 2021, $78 billion flowed into equity ETPs, whereas $33 billion flowed into the asset class in 2022.

In 2022, European fixed income ETP flows remained consistent with 2021 levels, totalling $21 billion in 2022 compared to $22 billion in 2021.

Though sustainable investing has continued to surge in popularity across Europe, there are concerns about its evolution. As well as broad concerns about greenwashing, last week, analysis from the European Securities and Markets Authority (Esma) found less than 1% of sustainable funds in Europe were meeting the minimum expectations set out by the EU’s proposed voluntary Ecolabel.

© 2023 funds europe

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