Industry News
ESG funds suffer first annual outflows in a decade as investors pull $13bn - Morningstar
Eva Thomas / Jan 19, 2024
Performance, politics, and a big call by BlackRock all contributed to ESG funds suffering their first calendar year of outflows since Morningstar's records began.
ESG funds suffered net outflows of $13bn in 2023, making it their worst calendar year on record, according to Morningstar.
The Chicago-based research firm began tracking flows into ESG funds more than a decade ago, and since then these products had enjoyed inflows in every calendar year, until 2023.
According to a forthcoming report from Morningstar, the fourth quarter of 2023 was the worst period of 2023, with investors pulling $5bn from ESG funds and ETFs in that period.
Morningstar analyst Alyssa Stankiewicz put ESG funds’ outflows in 2023 down to four main factors: their performance versus non-ESG peers, the political backlash against ESG, fund buyers’ concerns about greenwashing, and BlackRock’s decision to sell one of is ESG ETFs from a popular range of model portfolios.
In 2023, BlackRock’s now $13.4bn iShares ESG Aware MSCI USA ETF (ESGU) suffered outflows of $9bn with the majority of outflows, $6.4bn, coming in the first three months of 2023 following BlackRock’s decision to significantly...
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