Fund rebranding activity accelerated in the first quarter of 2025, as the 21 May deadline for the European Securities and Markets Authority’s (ESMA) greenwashing rule rapidly approaches, according to Morningstar’s latest report: SFDR Article 8 and Article 9 funds: Q1 2025 in Review.
At least 262 Article 8 and Article 9 funds with ESG-related terms in their names rebranded in the first quarter, including 185 that swapped terms and 75 that removed ESG-related terms from their names altogether, a notable uptick compared with the previous quarter.
More name and portfolio changes are expected to be reflected in the data in the coming months, beyond the May 21 deadline for the ESMA greenwashing rule.
“In the past 15 months, we estimate over 470 Article 8 and Article 9 funds have rebranded, accounting for approximately 11% of funds in scope of the ESMA fund naming guidelines. Of these, less than 30% have dropped all ESG-related terms from their names,” added Bioy.
“While this proportion may evolve in the coming months, it can be considered relatively limited. This means that asset managers in Europe remain keen to use fund names to signal ESG intentionality.”
In terms of fund flows, Article 6 funds – representing a smaller portion (42%) of the EU fund universe – extended their dominance over flows, attracting €112bn in net subscriptions in the first quarter of 2025.
Article 8 funds netted an estimated €52bn of net new money – the highest inflows since late 2021 – supported by increased subscriptions into fixed-income funds. Actively managed Article 8 funds continued their flow recovery by garnering €43bn, as inflows into passive Article 8 funds almost halved to €9.6bn.
Redemptions from Article 9 funds persisted for the sixth consecutive quarter as investors pulled a record €7.9bn, while combined assets in Article 8 and Article 9 funds edged down slightly to €6trn, representing 58% of the total EU fund market.
“The resilience of fixed income continues to shine against an uncertain economic and geopolitical backdrop,” added Bioy. “With substantial inflows in the first quarter of 2025, fixed-income investments, particularly Article 8 bond funds, demonstrated their critical role in offering yield opportunities and defensive positioning for cautious investors among times of market uncertainty.”
