Investors pulled $5.2 billion from sustainable funds in the United States during the first quarter of this year.
This was primarily driven by a single fund, the so-called iShares ESG Aware MSCI USA ETF vehicle, which bled $3.5 billion.
These withdrawals mark U.S. sustainable funds' third quarter of outflows in a year, a total of nearly $12.4 billion from these funds over the past year, according to fresh Morningstar data shared with Net Zero Investor this morning.
Global macroeconomic pressures, including an ongoing energy crisis and rising fears of recession, have driven this retreat.
Brighter picture
Overall, sustainable actively managed funds broke a three-quarter outflows streak and bounced back into positive territory, netting a modest $91 million during the period.
This is a brighter picture than their outflows in 2022, but still well below their average quarterly intake of $6.7 billion in 2021.
Meanwhile, passive funds shed nearly $6.1 billion in the first quarter of 2023, bucking a multiperiod trend of holding down the fort for U.S. sustainable funds. If not for one fund—iShares ESG Aware MSCI USA ETF—passive funds would have ended the quarter in the black.
During the week of March 20, iShares ESG Aware MSCI USA ETF shed more than $5 billion. On March 17, the fund had nearly $19 billion in assets. It lost more than one fifth of that base on the Monday that followed.
Despite outflows from sustainable funds, rising equity and bond markets drove assets in these funds to nearly $296 billion, their highest point since the first quarter of 2022.
This still represents a 17% decline from the all-time record of $358 billion at the end of 2021.
