Investors are pulling a lot of cash out of environmental, social, and governance (ESG) stock market funds as bond yields rise, but it is political action across the Atlantic that will determine the future of the strategy.
According to funds firm Calastone, June was the worst month on record for ESG equity fund outflows. UK investors took out a net £369mn, with North American ESG funds particularly hit.
But, for context, this was only the third month of ESG outflows ever recorded, so there is still significant market interest in these products. Investors are being attracted elsewhere by soaring bond yields, while cash funds can now get you a better return than has been possible for a very long time.