Global sustainable investment funds experienced their third consecutive quarter of positive net flows in the third quarter of 2026, extending a rebound after significant outflows in 2025, according to a new report by investment insights and data provider Morningstar.
According to the report, net inflows into sustainable funds reached $6.5 billion in Q3, the strongest quarter since late 2024, driven by continued momentum in Europe, but offset by a resumption of net outflows in the U.S.
Despite the positive flows, the report also found that global sustainable fund assets fell 2.1% to $3.8 trillion in the quarter due to market declines, and that new sustainable fund launches continued to fall.
The results in Europe marked the third consecutive quarters of positive flows into sustainable funds in the region, which drew in a net $9.4 billion in Q3 2026, up from $3.7 billion in the prior quarter. The report found that inflows in Europe continue to be driven by passive strategies, which attracted a net $10.8 billion, while active strategies saw a fifth consecutive quarter of outflows at -$1.4 billion. By asset class, fixed income funds led inflows in Europe at $8.8 billion, with equity funds drawing in a net $2.2 billion and allocation funds saw modest outflows.
U.S. sustainable flows turned negative again in Q3 at -$2.8 billion, after recording their first positive quarter since 2022 in Q2 2026, according to the report. By fund type, the report found that outflows continued to be driven by active strategies, while passive strategies experienced their fourth consecutive positive quarter with net inflows of $2.7 billion. Fixed income funds in the U.S. were positive as well, with $1.1 billion net inflows, offset by $4.2 billion outflows from equity funds.
Despite the continued positive flows, the report found that new sustainable fund launches continue to be subdued, even in Europe, which saw only 3 new funds in the quarter, down from 16 in Q2, and with most new fund activity concentrated in China, as no new funds were launched in the U.S., Canada, Australia, New Zealand or Japan.
Globally, the report found that Europe continues to dominate the sustainable fund universe, with $3.2 trillion in assets, or 84% of the global total, followed by the U.S. at 10%.
Click here to access the report.
