UK investors withdrew almost £1bn from ESG funds in August in the fourth consecutive month of outflows.
Environmental, social and governance (ESG) funds had their worst month on record in August, with UK investors withdrawing £953m throughout the month, according to new data from Calastone.
It was the fourth consecutive month of outflows for ESG funds, taking the total net money removed from these portfolios since May up to almost £2bn.
The high-growth nature of ESG investing meant performance was strong in the era of free cash and low interest rates and before 2023 they only encountered one month of outflows, but tightening monetary policy has soured investors’ appetites.
Net flows of ESG equity funds over the past three years
Source: Calastone
Calastone’s head of global markets Edward Glyn said passive funds are beating active ESG funds, which is another key driver of outflows and puts pressure on asset managers to improve performance.
“The move out of ESG funds has gathered pace in a remarkable reversal after the boom in recent years,” he said. “Four months of…
