Data published by German funds trade body BVI revealed that despite the weak net inflows, the German sustainable funds reached a whopping €977 billion (approx. $1.05 trillion) in 2024’s first quarter.
The BVI data shows that, at €727 billion (approx. $785 billion), retail funds accounted for around three-quarters of the total volume of funds managed in accordance with articles 8 or 9 of the EU’s Sustainable Finance Disclosure Regulation.
The special funds “Spezialfonds” categorised as sustainable accounted for €250 billion (approx. $270 billion), and grew at 45% in the last 12 months, which is much higher than the 12% growth of retail funds.
BVI said that the increase in assets in both categories was mainly due to reallocations of existing products and price increases in equities and bonds. The trade body informed that the new business was weak in the first quarter of 2024. The Spezialfonds recorded a modest net inflow of new money. The retail fund investors withdrew a total of €3.3 billion (approx. $3.5 billion) from products having sustainability features while retail funds without sustainability features gained €7.1 billion (approx. $7.3 billion).
In its statement, BVI said, “The EU regulation of retail distribution is likely to be one of the main reasons for this development: retail investors often indicate ‘no’ when being asked about their sustainability preferences in order to retain full flexibility when selecting products.”
The statement further said, “In addition, even interested investors struggle due to the complexity of mandatory questions, such as the desired minimum proportion of environmentally sustainable investments or adverse impacts that they would like to take into account.”
