From Morningstar:

Investors pulled €26.7 billion from Article 8 funds, impacting those with no commitment to sustainable investments.  Article 9 funds experienced their first quarterly outflows at €4.7 billion. Conversely, Article 6 funds attracted €15.7 billion in net new money. Article 8 funds registered net outflows of €27 billion in 2023, while Article 9 funds collected €4.3 billion and Article 6 funds garnered €93 billion.

Several factors contributed to waning investor appetite for Article 8 and Article 9 funds, including the macroeconomic environment, high interest rates, inflation, fears of recession, and geopolitical risks. Investors favored government bonds, an area where ESG integration remains a challenge.

Renewable energy companies faced soaring financing costs, materials inflation, and supply chain disruptions. Additional factors affecting investor demand for Article 8 and Article 9 products include greenwashing concerns and the evolving regulatory environment.

Active funds drove all the Article 8 fund outflows in the fourth quarter and over the full year. In contrast, passive Article 8 funds sustained their momentum. Active funds in the Article 9 category enjoyed inflows until last quarter, when they suffered €5 billion of redemptions. Passive Article 9 strategies garnered positive net flows in all but one quarter.

Combined assets in Article 8 and Article 9 funds increased by 1.7% over the fourth quarter to €5.2 trillion, a new record. Article 8 and Article 9 funds saw their market share rise to almost 60% of the EU universe. Despite the continued redemptions, Article 8 funds maintained their market share at around 55% at the end of December 2023.

Source: Morningstar Direct. Based on SFDR data collected from prospectuses on 97.8% of funds available for sale in the EU, excluding money market funds, funds of funds, and feeder funds.



Read more: Article 8 Funds Suffered Their Highest Quarterly…