European investors turn their backs on sustainable equities while bond funds recover
European investors have dumped Article 8 and 9 equity funds in the second quarter, turning instead to conventional equity funds. Meanwhile, investor demand for green bonds and money market funds remains strong.
In the year to date, European investors have sold off some €20bn in Article 8 and 9 equity funds, while conventional equity funds have reported nearly €140bn in net inflows, according to the latest fund flow data released by data provider Lipper, which tracks trends in the British and European mutual fund markets.
While many institutions tend to be invested through pooled funds or segregated mandates, the data nevertheless provide an important indicator of changing investor appetites in the European market.
Although investor demand for sustainably labelled stocks has declined, allocations to Article 8 and 9 money market funds have increased. US dollar-denominated Article 8 and 9 money market funds have reported more than €80bn in new inflows so far this year. Investor appetite for bond funds has also returned, with the asset class reporting more than €100bn in inflows year to date – over half of which went into Article 8 and 9 funds.
US dollar- and euro-denominated Article 8 and 9 money market funds appeared to be the most popular asset classes in the second quarter, while sterling-denominated money market funds reported net outflows, according to Lipper data.
“Money market funds seem to have taken equities’ role as the sustainable asset class of choice so far this year,” said Dewi John, LSEG Lipper’s head of EMEA research.
Lipper’s figures come alongside similarly positive data released by the Climate Bonds Initiative, which show that the global GSS bond market has now hit the €6trn milestone.
