Actively Managed Funds ‘Bleed’ Client Cash in ESG Upheaval (2)

A long-held truism of ESG is being challenged, namely the idea that the strategy is best-suited to active fund management.

For 11 of the past 12 quarters, clients have redeemed cash from actively managed funds registered as “promoting” environmental, social and governance goals, otherwise known as Article 8 under European Union regulations. The data, provided by Morningstar Inc., indicates a recalibration is underway in an investing form that from the get-go was supposed to favor the active selection and de-selection of assets.

As active ESG funds “bleed money,” Morningstar’s global director of sustainability research, Hortense Bioy, ...