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Climate-focused funds plummet 75% within two years amidst sales decline.

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TLDR:

  • Sales of climate-focused mutual funds have fallen by 75% in the past two years, according to data from Morningstar.
  • Factors contributing to the decline include a lack of coordination within the industry, poor fund performance, and investor skepticism about the impact of such funds on climate change.

Sales of climate-focused mutual funds have fallen by 75% in the past two years, according to data from Morningstar. The decline is believed to be caused by a variety of factors, including a lack of coordination within the industry, poor fund performance, and investor skepticism about the impact of such funds on climate change.

Jeff DeMaso, director of research at adviser website Adviser Investments, said that investors are “looking for a lot more resources and commitments from mutual fund companies” before they are willing to invest. Additionally, some investors may be turned off by the recent underperformance of climate-focused funds, which have seen their returns lag behind the broader market.

However, there are still some investors who remain committed to climate-focused funds. Elizabeth Irvin, an analyst at Morningstar, said that “investors who are really dedicated to the cause and also have the patience to wait for these technologies or investments to really take hold” are still interested in these funds.

Despite the decline in sales, some experts believe that climate-focused funds are still an important part of the market. Nancy Pfund, managing partner at venture capital firm DBL Partners, said that climate-focused funds “continue to play a vital role in the capital markets and are an important tool for investors who want to have impact, more than just the pure profits motive.”

The decline in sales of climate-focused mutual funds comes at a time when there is increasing awareness and concern about climate change. Many investors are looking for ways to align their investments with their values and support companies that are taking action on climate change.

Despite the decline in sales, there are still opportunities for growth in the climate-focused investing space. The Biden administration has made climate change a priority, and there are increasing calls for companies to disclose their climate risks and take action to reduce their carbon footprint. This could create new opportunities for climate-focused funds to attract investors.

In conclusion, sales of climate-focused mutual funds have fallen by 75% in the past two years, but there are still opportunities for growth in the space. Factors contributing to the decline include a lack of coordination within the industry, poor fund performance, and investor skepticism about the impact of such funds on climate change.

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