Customize Consent Preferences

We use cookies to help you navigate efficiently and perform certain functions. You will find detailed information about all cookies under each consent category below.

The cookies that are categorized as "Necessary" are stored on your browser as they are essential for enabling the basic functionalities of the site. ... 

Always Active

Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.

No cookies to display.

Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.

No cookies to display.

Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.

No cookies to display.

Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.

No cookies to display.

Advertisement cookies are used to provide visitors with customized advertisements based on the pages you visited previously and to analyze the effectiveness of the ad campaigns.

No cookies to display.

+441737452323 info@cfbusinesslinks.com

Image representing Sustainability

Sustainable Funds Outperformance 2024

Sustainable funds reached a significant milestone in 2024, with assets under management (AUM) surging to $3.5 trillion. Despite a noticeable slowdown in inflows, these funds posted strong performance, delivering a median return of 1.7%, outperforming traditional funds, that earned a return of 1.1%. 

A report from Morgan Stanley’s Institute for Sustainable Investing highlights the growing resilience of sustainable investments, even in periods of market volatility. Inflows into sustainable funds recorded $20 billion in the first half of 2024, a slower pace compared to previous years. The consistent outperformance of these funds compared to their traditional counterparts has reinforced their growing importance in investment strategies. 

Sustained Performance Despite Slowing Inflows 

The inflows into sustainable funds have slowed, accounting for 0.6% of year-end 2023 AUM, but the funds’ performance has remained strong. Sustainable funds achieved a median return of 1.7%, aided by their heavy exposure to equities. Large-cap stocks, which make up 57% of sustainable fund holdings, played a crucial role in boosting performance, with equities outperforming other asset classes. 

Over the past five years, sustainable funds have outperformed traditional investments by 4.7%, solidifying their appeal to investors. A £100 investment in sustainable funds in December 2018 would have grown to £135 by June 2024, offering superior returns compared to traditional investments. 

Outflows and Market Trends 

In May 2024, significant outflows of £12 billion was recorded in sustainable funds, impacting the overall inflow pace. However, market trends suggest that these funds will continue to grow. Sixty percent of survey respondents anticipate that the value of sustainable strategies will increase over the next two years. Investors remain confident in the long-term benefits of sustainable funds, viewing them as essential for managing risks and gaining exposure to decarbonisation and environmental goals. 

Long-Term Outlook 

Looking forward, sustainable funds are expected to remain prominent in global markets. With their lower volatility and complementary return profiles, these funds are well-positioned to benefit from emerging trends in renewable energy, resource efficiency, and electrification. Sustainability is increasingly shaping market performance, and these funds are likely to capitalise on long-term trends that prioritise environmental goals and lower carbon emissions. 

Sustainable funds continue to offer a compelling investment business case, with steady growth and consistent outperformance of traditional peers. Their resilience in fluctuating market conditions, combined with their focus on sustainability, positions them as key drivers of future investment strategies. 

Sources 

Sustainable Funds Reach Record $3.5 Trillion AUM in 2024: Morgan Stanley Report – ESG News 

RO3865603-Sustainable_Reality_1H_2024_Report-FINAL.pdf