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There were “subdued” flows in sustainable funds in Asia excluding Japan and China in the first quarter of the year, recording a 63 per cent decline from a revised $1.7bn in net new money chalked up during the previous quarter.
Sustainable open-ended and exchange traded funds in the Asia ex-Japan, ex-China region posted $622mn in net inflows in the three months to the end of March, Morningstar’s Global Sustainable Fund Flows report shows.
Despite receiving lower flows, Asian investors helped “marginally” in the recovery of the global sustainable funds universe, which pulled in nearly $900mn in total net flows. This comes after the sector suffered its first quarterly net outflows on record to a revised $88mn in the last quarter of 2023.
Total sustainable fund assets in Asia ex-Japan registered a slight 1.6 per cent increase compared with the previous quarter to $63bn, matching the figure it reached during the first quarter of last year.
Asia ex-Japan continues to make up just 2 per cent of the global sustainable fund sector that has reached nearly $3tn as of end-March, based on the latest report.
Although most countries in the Asia region had small outflows between January and March, Taiwan remained a standout market. Locally domiciled sustainable funds netted an influx of more than $1.2bn in net new money, pushing the region’s total to net positive.
Taiwan is still the largest market in the Asia ex-Japan, ex-China region with 24 per cent of assets invested in sustainable funds, the report shows.
In contrast, Hong Kong-domiciled sustainable funds bled $472mn over the quarter, the largest decline among single markets analysed in Morningstar’s report.
Singapore’s environmental, social and governance funds had net outflows of $29.5mn and assets fell 3.8 per cent quarter over quarter to $693mn.
Japanese sustainable funds suffered net outflows of $1.7bn between January and March, the eighth consecutive quarter of outflows for the market. This compares with the broader Japanese funds landscape, which registered inflows of $35bn in the first quarter of the year, according to Morningstar.
Australia and New Zealand slightly recovered from net outflows last quarter booking $27mn in net new money during the first quarter of this year.
Generally, investors in Asia ex-Japan continued to flock to passive strategies, with these funds taking in about $1.8bn in net inflows over the quarter. They now make up 48 per cent of the region’s sustainable fund assets, up 40 per cent from the same time last year.
In Australia, passive strategies attracted $92mn in net inflows during the first quarter while active sustainable funds experienced net outflows of $65mn, according to the report.
*Ignites Asia is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at ignitesasia.com.
