Sustainable funds in the U.S. set a record for flows in the first quarter, topping the previous quarterly record set in the fourth quarter, Morningstar reported Thursday.
Notwithstanding the sudden collapse of the bull market in February, the 314 open-end and exchange-traded sustainable funds available to U.S. investors had estimated net flows of $10.5 billion.
The quarter started with all-time monthly record flows of $5.2 billion. These slowed to $3.7 billion in February as the coronavirus pandemic gathered steam, and further eased to a still-positive $1.6 billion in March.
With first-quarter flows already at half the 2019 calendar-year record of $21.4 billion in net flows, sustainable funds are on track to eclipse that mark this year, even considering that the ongoing coronavirus pandemic could still wreak havoc with fund flows for the rest of 2020.
Jon Hale, Morningstar’s head of sustainability research, explains in a blog post why sustainable funds weathered the first quarter better than conventional funds.
According to the new report, some three-quarters of net flows went to ETFs and nearly 80% went to index funds, up from last year when environmental, social and governance ETFs took in only about 40% of overall sustainable fund flows and index funds about 60%.