Article 9 funds experienced their lowest ever QoQ inflow of €3.6 billion at the end of Q2 2023. Meanwhile, Article 8 funds lost €14.6 billion in outflows. These figures were revealed in Morningstar’s recent report, “SFDR Article 8 and Article 9 Funds: Q2 2023 in Review”. Despite the slow or negative growth, assets in both fund types rose by 1.4 percent overall during the quarter, passing €5 trillion for the first time.
Despite the low inflows, Article 9 funds performed the best out of all funds under the EU sustainable Finance Disclosure Regulation (SFDR) classification, rising 1.2 per cent, says the report. A third of the outflows from Article 8 funds were attributed to funds with “no commitment to sustainable investments”.
The tightening of SFDR classifications at the start of this year led to a deluge of funds moving out of Article 9 and into Article 8 as firms sought to avoid over-promising on their green credentials. The report finds that this movement has slowed, with only six funds downgrading from Article 9 to 8 during the quarter, and 180 funds upgrading from Article 6 to 8. Almost half of the 161 funds launched in the EU during Q2 have been classified as Article 8 or 9.