Assets invested in sustainable funds in Australia and New Zealand reached a record $38.08 billion in the third quarter, up 11 per cent on the second quarter and jumping 73 per cent compared to a year ago.
Morningstar estimated inflows of $2.61 billion for sustainable investments during this period, down from the record $3.78 billion clocked in the previous quarter, but still the second highest on record.
Fifty-two per cent of sustainable investment options with a five-year track record were found to have outperformed their category peers, said Morningstar global head of manager selection Grant Kennaway.
“This is encouraging for investors looking to build environmental, social, and governance portfolios that align with their values, knowing that they won't sacrifice returns when compared with investments in mainstream funds,” said Mr Kennaway.
According to Morningstar, 144 sustainable funds were available to investors in Australia and New Zealand. No new funds were launched during the quarter, putting 2021 on track to be the slowest year for new sustainable funds since 2014.
“Compared with Europe and the United States, the sustainable funds market remains relatively small in Australia,” said Mr Kennaway.
The top 20 funds were found to account for about 56 per cent of the assets in sustainable funds, with Vanguard and Australian Ethical collectively holding 40 per cent of the total market share.
Vanguard recorded the most inflows during the third quarter with $623 million, ahead of $452 million for BetaShares, $370 million for Dimensional and $236 million for Australian Ethical.
In a “stark contrast” to the record inflows for the sector overall, AMP Capital posted its fifth consecutive quarter of net outflows for its sustainable product range with net outflows of $69 million during the most recent quarter.
“Corporate issues at AMP and investment team departures at AMP Capital would likely explain the continuation of fund outflows,” said Mr Kennaway.
The group of 12 asset managers with net zero commitments surveyed by Morningstar called for more action from governments on climate change.
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
