US sustainable funds attracted net inflows in the second quarter of 2026, returning to positive flows for the first time since the start of 2022, according to Morningstar.
As Morningstar noted, following 14 consecutive quarters of net outflows, investors added close to $3 billion to US sustainable funds during the quarter.
In what Morningstar described as a ‘noteworthy moment’ for the sector, inflows and market appreciation drove assets in sustainable funds to $398 billion in the second quarter, up from $351 billion in the previous quarter.
Sustainable funds posted an organic growth rate of 0.8%, compared with 1.0% for the broader US fund landscape.
Passive strategies
‘Although the return to positive territory represents a notable shift after more than three years of withdrawals, investor demand focused on a relatively small group of passive strategies, while actively managed sustainable funds continued to experience redemptions,’ Morningstar noted.
Passive sustainable funds attracted some $6.5 billion in net inflows during the quarter, helping to offset $3.6 billion of outflows from actively managed sustainable funds.
One fund in particular helped power growth, Morningstar noted, with the First Trust Nasdaq Clean Edge Smart Grid Infrastructure ETF attracting $3.1 billion during the quarter, taking inflows over the past 12 months to more than $7.5 billion.
This fund targets companies involved in ‘strengthening the electric grid to better support surging demand from artificial intelligence usage and data centers, along with fluctuating supply from renewable energy sources’, Morningstar said.
Elsewhere, index-tracking funds, particularly those related to renewable energy and the climate transition, generally reported positive inflows in the period.
Global picture
At a global level, sustainable funds attracted around $3.7 trillion of net inflows in the second quarter of the year – up from $3.5 trillion in the previous quarter – with Europe and the US recording positive flows. However, Canada, Japan, Australia/New Zealand and most Asian markets outside China continued to see net redemptions.
‘The US continues to represent a small portion of the global sustainable fund landscape,’ Morningstar noted. ‘Europe dominates, with more than 80% of fund assets, and flows into sustainable funds have been steadier in Europe over the past few years.’ Read more here.
Global Sustainable Fund Statistics – Q2 2026
| Region | Flows Q2 2026 (US$ bn) | Flows Q1 2026 (US$ bn) | Assets Under Management (US$ bn) | Share of Global AUM (%) |
|---|---|---|---|---|
| Europe | 3.5 | 8.2 | 3,132 | 84 |
| United States | 3.0 | -4.3 | 398 | 11 |
| Asia (ex-Japan, ex-China) | -1.9 | -2.0 | 55 | 1 |
| Canada | -0.5 | 0.4 | 43 | 1 |
| Australia & New Zealand | -0.1 | 0.4 | 40 | 1 |
| Japan | -0.2 | -0.2 | 23 | 1 |
| China | n/a | -1.7 | 43 | 1 |
| Global Total | 3.7 | 0.8 | 3,734 | 100 |
Source: Morningstar Direct. Excludes funds of funds. Data as of 30 June 2026.
