Investors withdrew €20.5 billion (US$21.7 billion) from Article 8 funds under the EU’s Sustainable Finance Disclosure Regulation (SFDR) in Q3 after redeeming €21.5 billion in the previous quarter, according to research from Morningstar. It also found that Article 9 funds hit a “new low” attracting only €1.4 billion in the last three months. The data and analytics provider also identified nearly 280 funds that altered their SFDR status, including 250 upgrades, with the vast majority moving from Article 8 to Article 6. Eleven funds downgraded to Article 8 from Article 9. Other key findings from the report include close to 300 Article 8 funds revising their minimum sustainable investment commitment in Q3, a notable increase from the previous quarter’s 190, with the majority increasing their commitment. Yet, a third of Article 8 funds target no sustainable investments. Further, only 28% of Article 9 funds plan to make taxonomy-aligned investments. A Morningstar Sustainalytics survey following the 14 September publication of the European Commission consultation on SFDR reveals that market participants are split on the future of Article 8 and Article 9 funds. Fifty percent of respondents would like to see these classifications replaced by labels, 39% would prefer to keep Article 8 and Article 9 but introduce minimum standards, and 7% voted for the status quo.