The assets of sustainable funds in China edged up last year, according to a Morningstar report, as sustainable investing there is no longer driven just by stock market performance.
According to Morningstar research, assets of sustainable funds in China reached Rmb315bn ($43.8bn) at the end of June, an increase of 6.4%. This occurred despite the MSCI China index returning -4.3% during the same timeframe.
Morningstar noted in its report that historically significant inflows into sustainable funds in China often overlapped with periods of stock market outperformance such as in 2015, 2020 and 2021.
This is no longer the case as Chinese policymakers have started to embed sustainability into the country’s long-term objectives, notably in September 2020 when the government announced plans to reach peak carbon emissions in 2030 and carbon neutrality in 2060.
Morningstar noted that despite significant market headwinds in 2022, particularly in the renewable energy, EV and environmental protection sectors, sustainable funds continued to attract inflows.
Nonetheless, assets in sustainable funds peaked in 2021 at Rmb349bn, falling 15% to Rmb296bn the following year due to the A-share market selloff.
Morningstar noted that the number of sustainable fund launches peaked in 2021 at 76 before dipping slightly to 66 the following year and sitting at 29 during the first half of last year.
Morningstar also noted that despite the fact that more than half of the sustainable funds in China are currently active managed funds, passive sustainable funds are steadily gaining ground.
