Long-Term Net Assets: Focused Sustainable Mutual Funds and ETFs 
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Focused sustainable long-term fund assets under management attributable to mutual funds and ETFs (excluding money market funds), a combined total of 1,275 funds/share classes as well as ETFs (1,059 mutual funds/share classes and 216 ETFs), based on Morningstar classifications, closed the month with $358.7 billion in net assets. This reading of assets under management falls just short of the high 2025 level of $360.9 billion reached at the end of January, but higher than the $353.3 billion at YE 2024, and compares to 1,285 funds/share classes and $346.03 billion in net assets as of the prior month-end, for a month-over-month increase of $12.7 billion, or 4.0%. The increase is largely attributable to capital appreciation in June as sustainable long-term funds gained an average of 3.53%. June assets of mutual funds expanded by $7.9 billion, for a 3% increase, while ETFs added $4.8 billion, or a 4% gain.
Using a simple back of the envelope calculation, the gains achieved by focused sustainable funds in June were largely attributable to capital appreciation while net positive flows contributed an estimated $0.45 billion.
From the start of the year, combined assets under management increased by $5.4 billion, for a net gain of 2%, largely attributable to an upturn by ETFs that gained $7.21 billion while mutual funds gave up $1.75 billion. |
New Sustainable Fund Launches 
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Two new sustainable fund launches were recorded in June, bringing to five the number of new fund listings from the start of the year (excluding new share classes and rebrandings). This compares to six new listings during the same period in 2024 and 59 in 2023, reflecting the dramatic slowdown in new focused sustainable fund offerings starting in mid-2023 to date.
Of the five new listings this year, four were ETFs and one was a mutual fund. The two new ETF launches in June are both managed by Brown Advisory, an independent largely employee-owned firm, and the tenth largest provider of focused sustainable mutual funds and ETFs with $10.0 billion in assets under management at the end of June. The funds are sub advised by Vident Asset Management, a firm that provides portfolio trading, execution, and implementation services for Brown Advisory’s ETFs. The ETFs are actively managed, concentrated funds, that include the $489.2 million Brown Advisory Sustainable Growth ETF (BASG) as well as the $127.3 million Brown Advisory Sustainable Value ETF (BASV). |
Green, Social and Sustainability Bonds Issuance (to June 30, 2025) 
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According to SIFMA, global sustainable bond issuance, including green bonds, social and sustainability bonds, hit $218.2 billion, down from $234.2 billion in Q1, or a decline of 6.9%. YTD, issuance reached $452.4 billion versus $485.9 billion during the equivalent period in 2024, or a decline of 6.9%.
In the US, sustainable bond issuance dropped to $37.0 billion from $55.0 billion in the first quarter of the year. This represents a sharp quarter-over-quarter decline of 32.7% and a Y/Y decline of 4.7%. At $92.0 billion in issuance during the first six months of the year, sustainable bond issuance in the US is up from $83 billion or 10.9%. US sustainable bond issuance in Q2, which accounts for around 1% of total long-term US bond issuance per SIFMA, experienced a much sharper percentage decline versus a drop of 2.9% total bond market issuance in Q2 and a Y/Y increase of 11.4%.
Global green bond issuance reached $147.4 billion in Q2, versus $130.3 billion in Q1, or an increase of 13.1%. At the same time, both social and sustainability bond issuances recorded 18.3% and 39.4% declines, respectively. In the US, issuance of green bonds reached $12.5 billion in Q2 versus $15.6 billion in Q1, or a 19.5% decline. Social and sustainability bonds, at $4 billion and $20.5 billion, respectively, registered sharper drops of 37% and 38%.
Assuming no change in issuance patterns over the next six months, sustainable debt volume could reach about $900 billion and exceed last year’s level of $866.2 billion.
It should be noted that SIFMA’s data does not include sustainability linked bonds, sustainability linked notes and transition bonds. |
Short-Term Relative Performance: Selected ESG Indices vs. Conventional Indices 
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Reflecting resilient equity markets, US stocks posted strong increases again in June as the S&P 500 index registered a record high of 6,205 at the end of the month and closed with a gain of 5.09%. The Dow Jones Industrial Average added 4.47% while the Nasdaq Composite, fueled by mega-cap tech stocks, delivered another strong monthly rise of 6.64% after adding 9.6% in May. Small cap stocks also performed well, adding 5.44%, as the Russell 2000 Index posted a second consecutive monthly total return exceeding 5%. Global equity markets were also broadly higher, with the MSCI ACWI ex USA Index increasing 3.4% and the MSCI Emerging Market Index, which benefited from strong gains in Korea and Taiwan, recording a gain of 6.01%. At the same time, the Bloomberg US Aggregate Bond Index and the broader Global Aggregate index added 1.54% and 1.9%, respectively.
In the second quarter, US stocks and bonds recovered from April’s volatility triggered by the April 2 liberation day larger than expected tariff announcement that caused a sharp selloff across markets. In the end, investors’ worst fears failed to materialize. Renewed investor confidence and a strong earnings season helped drive second quarter results to new highs. The S&P 500 gained 10.94%, the Nasdaq Composite Index pulled ahead with a gain of 17.96% while the MSCI ACWI ex USA added 12.03%. Bonds rose by 1.21%
Against this backdrop, three of six chosen sustainable international stock indices published by MSCI outperformed their conventional counterparts in June whereas the two U.S. sustainable indices underperformed, and the single sustainable bond index was even with its underlying index. The indices are chosen to represent a broad cross section of sustainable investing market segments.
Positive relative results in June were recorded by the three international stock indices, the MSCI ACWI ex USA Selection Index, the MSCI EAFE Selection Index and the MSCI Emerging Markets that beat their underlying indices by 17 basis points (bps), 4 bps and 16 bps, respectively. At the same time, the two MSCI US Selection indices underperformed, trailing their underlying counterparts by 5 bps and 105 bps, respectively. Lastly, the Bloomberg MSCI US Aggregate ESG Focus Index was even with its underlying Bloomberg US Aggregate Bond Index.
Over the trailing twelve months, the stock indices presented divergent results. Four stock indices trailed, but the one exception was the MSCI Emerging Markets Select Index that outperformed its underlying index by a wide 5.98% margin. The same index offers a generally compelling case over extended time intervals, ranging from the intermediate to long-term. The same can be said for the Bloomberg MSCI US Aggregate ESG Focus Index which has been closely tracking its underlying index since its inception and now covers a five-year interval. |
