Global sustainable funds pulled in $3.7bn net inflows in the second quarter of this year as the market continued a modest rebound, new data shows.
Europe remained in positive territory with $3.5bn net inflows, although flows slowed considerably compared to the first quarter when they attracted $9.1bn, according to Morningstar’s latest Global Sustainable Fund Landscape for Q2 2026.
Meanwhile US sustainable funds flipped to positive territory for the first time since 2022, reporting inflows of nearly $3bn. That marks a significant turnaround from Q1, when they recorded their 14th consecutive quarter of outflows at $4.3bn.
Overall, global sustainable fund assets rose to an estimated $3.73tn, up from $3.5tn at the end of Q1.
However, despite renewed demand for sustainable funds, product development remained suppressed, with 32 new sustainable funds launched globally – almost double the 17 launched in Q1, but still considerably lower than the 50 new funds launched in the final quarter of 2025.
Read more: Sustainable funds return to net inflows in Q1
“The second quarter shows that demand for sustainable funds remains highly selective. Europe stayed in positive territory, but inflows slowed from the first quarter and were again concentrated in passive strategies and fixed income, while sustainable equity funds continued to see pressure,” said Monika Calay, director of UK Manager Research at Morningstar.
“The US sustainable fund market saw a reversal in Q2, with inflows returning after fourteen consecutive quarters of outflows. Again, passive strategies drove the recovery, as investors remain mostly interested in sustainable exposures when they are delivered through low-cost, index-based vehicles.
“Across regions, the picture is not one of broad-based recovery, but of investors becoming more discerning about where sustainability fits within portfolios.“
Read more: Environmental factors just 5% of ESG scores at quarter of FTSE 100 firms
