U.S. sustainable funds returned to positive territory during the second quarter with nearly $3 billion in net inflows, reversing a prolonged downturn that had lasted more than three years. The inflows represented a 0.8% organic growth rate for sustainable funds domiciled in the country. This marked the first time since 2022 that the sector had experienced net inflows rather than withdrawals.
Despite the gains in sustainable funds, conventional funds continued to demonstrate stronger investor demand, pulling in $356 billion during the quarter compared to $337 billion in the first quarter. The asset share held by sustainable investments in the U.S. declined slightly from 2024 to 2025, as the sector’s modest growth was outpaced by the expansion of the broader investment market. Total U.S. sustainable assets reached a record $398 billion in the second quarter, representing a 13% increase from the end of the first quarter.
The return to positive inflows was driven primarily by passive sustainable strategies, which attracted $6.5 billion, while actively managed sustainable funds experienced $3.6 billion in outflows. Research attributed investor interest to energy transition infrastructure and technologies supporting power needs from artificial intelligence and data centers, with one prominent clean energy infrastructure fund recording $3.1 billion in inflows during the quarter.
The sustainable fund landscape continued to experience consolidation, with three new funds launching in the quarter while 22 funds closed, up from 13 closures in the first quarter. BlackRock, including its iShares exchange-traded fund brand, remained the largest manager of U.S. sustainable assets with $76.1 billion, followed by Vanguard with $50.7 billion and Morgan Stanley with its subsidiaries at $36.6 billion.
Article Attribution | Read More at Article Source
Article summary produced by Claude AI