Morningstar has just published its Global Sustainable Fund Flows report for Q1 2026, showing a return to net inflows at $3.5 billion – but with sharp regional divergence and ongoing pressure from market and political headwinds. Kenneth Lamont, Principal, Manager Research at Morningstar has commented.
Following the release of Morningstar’s latest Global Sustainable Fund Flows report, Kenneth Lamont said:
“The return to modest inflows in the first quarter suggests that investor appetite for sustainable strategies has not disappeared, but it remains fragile and highly region-specific. Europe continues to stand out, with flows turning positive again, supported by strong demand for passive strategies.
“At the same time, the US market remains under pressure, with outflows extending their multi-quarter trend against a challenging political backdrop and ongoing scrutiny of ESG investing.
“More broadly, the landscape for sustainable funds is still complex. Market volatility, geopolitical uncertainty, and evolving regulation are all influencing investor behaviour, while asset managers are becoming more cautious in bringing new products to market.
“What we are seeing is a reset rather than a retreat. Growth is continuing, but at a slower pace, with investors becoming more selective and more focused on clarity around strategy, outcomes, and value,”
Key finding in the report include:
- Global sustainable funds returned to positive territory in Q1 2026, with estimated net inflows of USD 3.5 billion, following USD 27 billion in outflows in Q4 2025.
- The rebound was driven by Europe, where flows reversed sharply, attracting USD 9.1 billion in inflows – the first positive quarter since Q3 2024.
- In contrast, US sustainable funds recorded a 14th consecutive quarter of outflows, totalling USD 4.3 billion.
- The rest of the world, in aggregate, recorded net outflows. Canada and Australia/New Zealand were the only regions outside Europe to record positive flows.
- Global sustainable fund assets declined by approximately 10% in Q1 2026 to USD 3.51 trillion, driven primarily by market volatility. Since the end of 2018, global sustainable fund assets have grown nearly sixfold from roughly USD 600 billion.
- Product development dipped to new lows, with just 17 new sustainable funds launched globally, down from 50 in the prior quarter.
To access the full report, head here: Global Sustainable Fund Flows: Q1 2026 in Review | Morningstar
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