Dive Brief:
- Positive Inflows: U.S. sustainable funds experienced positive inflows in Q2 for the first time since 2022, ending a streak of 14 quarters of net outflows, according to a recent report from Morningstar.
- Net Inflows: Sustainable funds attracted nearly $3 billion in net inflows during the quarter, corresponding to a 0.8% organic growth rate.
- Conventional Funds: Still, traditional funds outperformed sustainable ones, gathering $356 billion in inflows in Q2, up from $337 billion in Q1.
Dive Insight:
- Asset Share Decline: The asset share for sustainable investments in the U.S. slightly decreased from 2024 to 2025, as growth was outpaced by the broader investment market, according to the U.S. Sustainable Investment Forum.
- Record Sustainable Assets: Total U.S. sustainable assets hit $398 billion in Q2, reflecting a 13% increase from Q1.
- Investor Behavior: The positive inflow trend was largely driven by passive strategies, attracting $6.5 billion, while actively managed funds saw $3.6 billion in outflows.
- Fund Closures: Despite the uptick in inflows, closures of sustainable funds continued to exceed new launches (3 new vs. 22 closures in Q2).
- Market Leaders: BlackRock leads with $76.1 billion in sustainable assets, followed by Vanguard and Morgan Stanley.
- Emerging Interests: Investor focus includes energy transition infrastructure, made apparent by the success of the First Trust Nasdaq Clean Edge Smart Grid Infrastructure fund, which garnered $3.1 billion in Q2 alone.
For further details, refer to the original Morningstar report or the analysis on ESG Dive.
