Sustainable Investing Monitor-December 1, 2025

Long-Term Net Assets: Focused Sustainable Mutual Funds and ETFs 

The net assets of focused sustainable long-term funds attributable to mutual funds and ETFs (excluding money market funds), based on Morningstar classifications, took a slight dip in November and closed the month with $377.7 billion in net assets across a combined total of 1,188 funds/share classes representing 324 mutual funds/989 share classes and 199 ETFs.  This compares to last month’s 1,202 funds/share classes and $380.0 billion in assets under management, or net declines of 14 funds/share classes and $2.3 billion in net assets. 

The November $2.3 billion aggregate decline in focused sustainable long-term fund assets under management, the first drop following six consecutive monthly gains, is attributable to cash outflows that were offset by capital appreciation experienced by mutual funds.    

Using a simple back of the envelope calculation, the gains achieved by sustainable long-term funds in November were entirely attributable to capital appreciation of about $0.2 billion.  Offsetting this amount were negative flows in the amount of about $2.3 billion.    

From the start of the year, combined assets under management increased by almost $24.5 billion, or 6.9%. The increase was largely attributable to net gains by ETFs that added some $21.6 billion, or 88% of the total, while the larger mutual funds segment added only about $2.9 billion.          

New Sustainable Fund Launches

Focused sustainable new fund listings through November of this year have been adjusted to reflect the back-dated addition in October of the Pictet Cleaner Planet ETF, a $13.2 million fund that integrates sustainability by actively investing in global companies whose products and services support the transition to a cleaner, more sustainable economy, targeting environmental technologies across energy systems, water solutions, pollution control, and climate adaptation. It evaluates and integrates environmental, social, and governance (ESG) factors into its security selection, applies exclusions for controversial activities (e.g., thermal coal and weapons), and pursues active ownership through engagement and responsible voting to influence better corporate ESG practices. 

The addition of Pictet expands to seven the number of year-to-date new launches (excluding any new mutual fund share classes), compared to nine new listings during the same period in 2024 and 66 in 2023. Of the seven new listings this year, five were ETFs and two were mutual funds.  The drop-off in new listings continues to reflect the dramatic slowdown in new focused sustainable fund offerings, starting in mid-2023 to date. 

Also in November, the universe of focused sustainable funds continued its decline. Some of the decline in the number of funds/share classes is attributable to acquisitions and reorganizations, for example the acquisition of Macquarie Asset Management’s US and European public investment business by Nomura Holdings America Inc that resulted in the rebranding of two focused sustainable funds/six share classes and the rebranding of funds now consolidated under Victory Capital Management.  At the same time, several funds were liquidated due to their inability to gain traction. For example, Coho Partners liquidated as of November 3rd the Coho Relative Value ESG Fund, the firm’s only focused sustainable fund offering that stood at $0.4 million in net assets.   

Green, Social and Sustainability Bonds Issuance (to September 30, 2025)  

Data covering sustainable debt offerings for the fourth quarter 2025 is still preliminary and will be published in January 2026.

Global issuance of sustainable debt remained substantial but broadly flat year-over-year during October and early November 2025, reflecting a period of consolidation rather than renewed acceleration. According to Bloomberg-compiled data, total global ESG and sustainable debt issuance reached approximately $918 billion year-to-date through November 7, 2025, essentially unchanged from the comparable 2024 period at $922 billion*. Issuance softness was described as broad-based across green, social, sustainability, sustainability-linked, and municipal ESG instruments, and across both bond and loan formats, suggesting that higher interest rates and issuer selectivity continued to weigh on activity into the fourth quarter. Within the labeled bond universe, green bonds remained the dominant category in 2025, accounting for roughly 55–60% of total labeled issuance, with Europe continuing to represent the largest regional source of supply. While issuance volumes in October and November were sufficient to keep year-to-date totals near prior-year levels, available data indicate no material re-acceleration in global sustainable debt issuance late in the year. *(An article published by Bloomberg on December 25, 2025 reported that “green bond and loan issuance has reached a record $947 billion so far this year, according to data compiled by Bloomberg Intelligence.” At first glance, this data seems to fall out of range and requires further reconciliation and validation.).

The chart displayed covers the period to September 30, 2025, and is sourced to SIFMA.  It should be noted that SIFMA’s data does not include sustainability linked bonds, sustainability linked notes and transition bonds.  (Note: Prior period quarterly data reflect any latest adjustments).       

Short-Term Relative Performance: Selected Sustainable Indices vs. Conventional Indices

Market overview. In November 2025, U.S. equity markets posted modest gains amid persistent volatility and shifting investor preferences. Market benchmarks such as the S&P 500 and Dow Jones Industrial Average finished the month slightly positive at 0.25% and 0.48%, respectively, while the Nasdaq Composite lagged with its negative return of 1.45%, pressured by profit-taking in high-valuation technology stocks. Mid-month weakness, which saw the S&P 500 decline by 4.4% for the month, gave way to late-month strength on easing inflation readings, renewed expectations for Federal Reserve policy easing, chiefly due to economic data that has supported an interest rate cut in December. The reopening of the government after the longest government shutdown in history additionally boosted optimism of an economic reacceleration in 2026, while strong results on the corporate earnings front helped bulls keep AI doubters and valuation hawks alike at bay. This backdrop contributed to a modest broad market advance, with value and cyclical sectors gaining relative traction compared to mega-cap technology names.

On a year-to-date basis, the three widely quoted U.S. equity indices, the S&P 500, the DJIA and the Nasdaq Composite, ended November up 17.81%, 13.88% and 21.71%, respectively.  

Developed international markets delivered mixed to narrowly positive performance results in November, with the MSCI EAFE Index posting a gain of 0.62%. European equities were roughly flat to slightly positive, influenced by macroeconomic data and central bank policy outlooks. The United Kingdom saw relative strength as gilt yields eased alongside expectations of Bank of England rate cuts. Emerging markets generally lagged developed counterparts, challenged by geopolitical uncertainty and currency headwinds.  The MSCI Emerging Markets Index gave up 2.39%, largely due to weakness in Asia, including China that declined by 2.5%, but helped by positive results in Latin America (+6.06%) and Eastern Europe (+2.69%). Overall, global equities outside the U.S. reflected cautious positioning amid persistent macro and policy uncertainties.

Fixed income delivered positive total returns across major segments in November 2025 as sovereign and high-grade credit yields drifted lower. U.S. Treasury yields softened across the curve, lifting prices of intermediate and long duration bonds. The Bloomberg U.S. Aggregate Bond Index recorded a gain of 0.62% in November and 7.46% year-to-date, as investors increasingly priced in the potential for a Federal Reserve easing. Corporate bonds, both investment grade and high yield, also generated positive returns as credit spreads tightened and demand remained resilient. Municipal bonds posted modest gains, adding 0.23% according to the Bloomberg Municipal Bond Index, with stable yields and seasonal technical support. International sovereign bonds, including several Asian markets, attracted inflows driven by yield differentials and diversification interests.

Focused sustainable investment funds, including mutual funds and ETFs with explicit sustainable investing criteria, generally kept pace with broader market returns. Sustainable U.S. equity funds added an average of 0.32% while sustainable taxable bond funds posted an average gain of 0.59%.  In line with the performance of the MSCI ACWI ex USA that recorded a narrow 0.03% decline, sustainable international funds generated an average decline of 0.35%.  

On a year-to-date basis, sustainable U.S. equity funds, international funds and taxable bond funds recorded gains of 17.7%, 5.99% and 3.51%, respectively.

Near-term results posted by selected sustainable indices. Three of six MSCI sustainable indices, chosen to represent a broad cross section of sustainable investing market segments, outperformed their conventional counterparts in November. These included the MSCI USA Small Cap Selection Index, the MSCI Emerging Markets Selection Index and the Bloomberg MSCI US Aggregate ESG Focus Index that outperformed their conventional counterparts by 83 basis points (bps), 18 bps and one basis point, respectively.  Three-month results were stronger, as five of six MSCI Selection indices outperformed while year-to-date results were mixed.  Over the 11-month interval, three of six indices underperformed.  Two of these benchmarks, the MSCI USA Small Cap Selection Index and the MSCI EAFE Selection Index underperformed by over 4%.    

Intermediate-to-long term results posted by sustainable indices.  The MSCI USA Selection Index is the only one of the six benchmarks that continued to post consistent outperformance over the three-, five- and ten-year intervals to the end of November.  With regard to fixed income, the Bloomberg MSCI US Aggregate ESG Focus Index has managed to very closely track the Bloomberg US Aggregate Bond Index over the short-to-intermediate term interval that it’s been calculated, oftentimes achieving the same results or, if they vary, the results deviate by no more than one to two basis points in either direction.