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ESG Funds Resilient in COVID-19 Sell-Off

'Investors in sustainable funds are typically driven by their values, invest for the long term, and seem to be more willing to ride out periods of bad performance,' Morningstar says.

While global fund assets saw outflows of $384.7 billion in the first quarter amid the market sell-off, sustainable funds attracted $45.6 billion, bringing assets to $841 billion as of the end of March, according to new data by Morningstar.

“The continued inflows in first-quarter 2020 speak of the stickiness of ESG investments,” the Morningstar report said. “Investors in sustainable funds are typically driven by their values, invest for the long term, and seem to be more willing to ride out periods of bad performance.”

While Europe dominated the space, accounting for about 72% of first quarter ESG flows, interest in these funds is growing in the U.S., which accounted for nearly 23% of the global inflows, higher than previous quarters.

Sustainable funds were not totally immune to the effects of the coronavirus, with global assets in these funds falling 12% in the first quarter from a record high of $960 billion at the end of 2019. That said, the global fund universe saw assets down 18% over that same period, Morningstar says.

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