In all, the global sustainable fund market experienced net redemptions of US$2.5 billion in the fourth quarter, marking an historic low point for the industry. US scepticism toward ESG follows years of attacks by Republicans, with legislators in New Hampshire even seeking to criminalise the practice. At the same time, investors have started to question the strategy’s staying power, after an extended period of poor financial returns.
For the first time ever, ESG funds saw global net outflows amid a major exodus by US investors from environmental, social and governance strategies.
US fund clients withdrew a net US$5.1 billion ($6.8 billion) in the final three months of 2023, according to a fresh analysis by Morningstar Inc. published on Thursday. Combined with US$1.2 billion in outflows in Japan, that was too severe a retreat for Europe’s US$3.3 billion of net inflows to bolster the global market.
