Sustainable Funds Return to Outperformance in First Half of 2023

This report is part of the Morgan Stanley Institute for Sustainable Investing's 'Sustainable Reality' series, focusing on the performance of sustainable funds compared to traditional funds for the first half of 2023. It documents that sustainable funds returned to outperform traditional funds, achieving a median return of 6.9% against 3.8% for traditional funds. The analysis indicates that stable market conditions contributed to this performance, particularly benefiting sustainable funds' growth-oriented focus. Additionally, sustainable funds' assets under management (AUM) surpassed $3.1 trillion, representing nearly 8% of total AUM. The report also includes data on restriction screening, noting that over 20% of global AUM is now in funds employing at least one restriction screen, a significant increase from previous years. The findings suggest that despite fluctuations in performance, sustainable funds are maintaining their appeal as long-term investment options, with strong investor demand continuing into 2023.