Passive drives outflows from ANZ sustainable funds
Flows into Australasian sustainable funds have moved back into outflow territory in the second quarter of 2025 driven by redemptions from passive funds.
According to Morningstar’s quarterly Global ESG Flows update, which covered the three months to 30 June, Australasian funds saw outflows of US$165 million ($252 million) which was a reversal of positive flows seen in the previous quarter.
This was the first quarter of outflows since the second quarter of 2024 when they lost US$555 million.
In particular, it was passive products which saw the greatest redemptions at US$400 million, while active versions attracted US$235 million in inflows. This bucked the trend in the previous quarter when passive gained US$272 million and active gained only $33 million.
Equity strategies saw inflows of US$151 million, while “miscellaneous” strategies which cover infrastructure, alternatives, commodities and property gained US$36 million. On the other hand, fixed income sustainable funds saw outflows of US$281 million, bucking the wider trend for fixed income funds to see inflows.
Total funds under management in Australasian sustainable funds sat at US$34.2 billion.
No new funds were launched during the quarter, but two funds – Kernel S&P Kensho Electric Vehicle Innovation Fund and Warakirri Ethical Global Equities Fund – closed to bring the total number of funds to 262. The closures were an improvement from six closing in the first quarter.
Looking at the largest fund houses for sustainable assets, Dimensional Fund Advisors held onto the top spot with 17.4 per cent market share followed by Betashares with 12.4 per cent, with both firms increasing their market share.
State Street Investment Management, BlackRock, and Australian Ethical all saw their market share slightly decline.
The top 10 firms accounted for 70 per cent of total assets in sustainable funds, up slightly from 68 per cent in the previous quarter.
Source: Morningstar Direct. Data as of July 2025
Globally, BlackRock is the largest manager for sustainable funds with US$466 billion in assets held in ESG-focused or sustainable open-ended and ETF funds. Some $143 billion is in active funds, while $223 billion is in its iShares and ETF products.
AUTHOR
Laura Dew
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