European Sustainable Fund Demand Limits 2022 Outflows

The European Fund and Asset Management Association (EFAMA) has published its latest monthly Investment Fund Industry Fact Sheet, which found that demand for Sustainable Finance Disclosure Regulation (SFDR) Article 9 funds remained robust in December 2022, despite equity and bond funds recording net outflows of €72 billion (US$76 billion) and €137 billion respectively. Article 9 funds, which have explicit sustainable objectives, attracted €26 billion of new money, according to the EFAMA data. The outcome is more pronounced give that many fund managers reclassified their Article 9 funds to Article 8 in in the second half of 2022 due to clarification provided by the European Securities and Markets Authority (ESMA) in June of last year. “2022 was a difficult year for UCITS and AIFs, which suffered net outflows of 278 billion, a level not seen since the financial crisis of 2008,” Bernard Delbecque, Senior Director for Economics and Research at EFAMA, said. “On a positive note, ETFs and sustainable SFDR Article 9 funds continued to attract net new money, despite difficult market conditions. This outcome confirms that investor demand momentum (particularly institutional investors) remains with ETFs thanks to their low costs and trading flexibility, and with sustainable funds due to the expected long-term benefits of a sustainable investment approach in terms of lower downside risk and ESG impact.”

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