The Australia and New Zealand (ANZ) sustainable funds universe recorded positive net flows of US$640 million in the September quarter, according to new data from Morningstar.
This follows revised capital outflows of $555 million in 2Q24.
Morningstar noted that ANZ was one of only three regions to report positive flows over the period, with Europe and Asia (excluding Japan) attracting $10.3 billion and $2.5 billion respectively .
At the same time, the United States saw outflows of $2.5 billion, while Japan saw $600 million and Canada $100 million.
In total, the global sustainable funds universe saw $10.4 billion in investor flows during the quarter, compared to $6.3 billion in 2Q24.
However, for the Australian sustainable funds market, Morningstar has observed the dominance of several fund managers who continue to hold the lion’s share of the market.
“The Australian sustainable funds market remains quite concentrated, with the top 10 companies accounting for almost two-thirds of total sustainable fund assets, which have remained stable this year,” the financial services company said.
Namely, Dimensional Fund Advisors had the highest market share of 14.6 percent, followed by Betashares (11.9 percent) and Vanguard (8.6 percent).
Mercer, BlackRock, Australian Ethical and Pendal all had market shares ranging from 4.5 percent to 6 percent.
Additionally, two new sustainable funds were launched in the third quarter of 2024 – Altor Social Infrastructure and Macquarie Energy Transition Infrastructure – totaling nine product launches in 2024.
“The nine fund launches so far this year are made up entirely of active strategies, a significantly lower number than in previous years, particularly from 2020 to 2022,” Morningstar said, adding that 2022 has already seen nine fund launches. sustainable funds in its first quarter alone.
At the same time, five closures were confirmed at the end of the third quarter.
“Interest rate regime changes in 2022 have subjected active asset managers to pressure on their profit margins due to rising cost bases and limited revenue growth. »
The main factors behind the closure decision, Morningstar added, were limited demand and underperformance of sustainable strategies.
Nonetheless, it said the rise in flows into sustainable funds “reflects the continued recovery of the wider funds market in the region”.
In ANZ, flows into active strategies re-emerged, bringing in almost $267 million. Meanwhile, flows into sustainable passive funds remained positive in 2024, collecting US$373 million in the quarter.
At the end of September, according to the company, the entire fund and ETF universe for Australia and New Zealand saw net inflows of $9.52 billion, mainly driven by passive strategies, which received net inflows of $6.73 billion, while active strategies saw net inflows of $9.52 billion. capital inflows of $2.8 billion.
Additionally, equity strategies saw net inflows of approximately $570 million, followed by inflows into fixed income strategies of approximately $125 million.
“However, allocation funds saw another quarter of outflows, albeit smaller compared to the previous quarter,” Morningstar said.
