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With all the ongoing discussions around sustainable investing, it makes sense to review the estimated fund flows in the European fund industry based on the assigned SFDR articles. At first glance, it appears the trend of 2023 has continued, as mutual funds and ETFs assigned to Article 9 of the SFDR were the only category which faced outflows (-€27.8 bn) over the course of 2024.
Graph 1: Cumulative Estimated Net Flows in the European Fund Industry by SFDR Article (in bn EUR) 
Source: LSEG LipperA closer look shows that Article 9 products faced estimated net outflows in every single month of the year. Conversely, mutual funds and ETFs assigned to article 6 of the SFDR enjoyed inflows in every single month of the year, for a total of €277.4 bn. These trends may lead to the assumption that European investors prefer conventional products over ESG-related products.From my point of view, this assumption is wrong, as mutual funds and ETFs assigned to article 8 of the SFDR were the best-selling product group (+€280.4 bn) over the course of the year. This may mean that European investors have a quite dedicated view on ESG-related products and are buying those products which offer the best suitability to their portfolios, as well as to their own expectations on sustainable investments. With regard to the overall trend, it is noteworthy that February 2024 was the only month in which article 8 products faced outflows.
Graph 2: Monthly Estimated Net Flows in the European Fund Industry by SFDR Article (in bn EUR) 
Source: LSEG LipperThe same flow pattern can somewhat be observed for products which have no SFDR article assigned, as they may be domiciled and sold only outside the European Union (EU). While March was the only month in which these products faced outflows, they enjoyed overall estimated net inflows (+€90.3 bn) for the year 2024.More generally speaking, these fund flow trends were repeating the trends witnessed in 2023. One of the reasons why European investors may not buy article 9 products might be seen in the fact that these products often have very specific investment objectives which may not resonate with the investment objectives of the investors. In addition, some investors may fear that they may miss out on performance if an ESG-related product is using too strong exclusion criteria, as this may decrease the eligible investment universe of a respective product massively.More By This Author:S&P 500 Earnings Dashboard 24Q4 – Update
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