Sustainable Investing Monitor-May 2026

Long-Term Net Assets of Focused Sustainable Mutual Funds and ETFs: 2025 – 4/30/2026

The powerful April rebound in global equities produced a strong headwind that led to a month-over-month gain of $26.2 billion in net assets, a combination of capital appreciation and net positive flows, to end the month at $387.2 billion for long-term labeled sustainable mutual funds and ETFs based on Morningstar’s classifications.  This was across a combined total of about 533 mutual funds, consisting of 1,091 share classes, and 190 ETFs.  The number of mutual funds and ETFs continued to decline due to fund liquidations/delistings and/or rebrandings, a trend that may be exacerbated due to the upcoming effective date for the implementation of the SEC’s amended Names Rule. See article entitled Sustainable funds meet the names rule:  What to watch for as the June deadline lands at https://sustainableinvest.com/sustainable-funds-meet-the-names-rule-what-to-watch-for-as-the-june-deadline-lands/.

April’s gain in net assets was driven by the addition of $15.7 billion by mutual funds while ETFs added $11.6 billion in net assets. Using a back of the envelope calculation, however, long-term mutual funds experienced net cash outflows totaling an estimated $2.9 billion whereas ETFs recorded estimated net inflows of $4.4 billion, for a net inflow of $2.7 billion in assets. 

Since the start of the year, labeled long-term sustainable mutual funds and ETFs added $12.6 billion in net assets, however, the segment recorded about $10 billion in estimated net outflows.    

New Focused Sustainable Fund Launches: 2025 – 4/30/2026

There were no new focused sustainable fund launches recorded in April 2026, based on Morningstar reporting, which was also the case over the previous three months. This compares to four fund launches during the same four-month period in 2025.   The drop-off in new listings continues to reflect the dramatic slowdown in new focused or labeled long-term sustainable fund offerings, starting in mid-2023 to-date, coincident with a political backlash against ESG investing and potentially some diminishing level of response to ESG-labeled fund products.  Compliance with the SEC’s amended Names Rule that goes into effect in June 2026 may also be holding back new fund launches.    

During the month of April there were a few fund mergers and liquidations, including but not limited to funds offered by Jackson National Life (JNL) and Nuveen.  The JNL/AB Sustainable Global Thematic Fund, consisting of two share classes and valued at $25.1 million, was merged as of April 29, 2026.  Also, two Nuveen managed funds were liquidated. These included the Nuveen Sustainable Core ETF with $6.3 million in net assets and the Nuveen Winslow Large Cap Growth ESG Fund with $10.4 million in assets.  

Green, Social and Sustainability Bonds Issuance to 3/31/2026  

No major data provider has yet published a clear, standalone tally for April 2026 sustainable debt issuance. For a recap of first-quarter results, see April’s Sustainable Investing Monitor. In the meantime, Bloomberg reported that China’s Ministry of Finance priced in the last week of May 6 billion yuan (about USD $885 million) in sovereign green bonds in Hong Kong. This marked Beijing’s first green bond issuance in the city and its second offshore RMB-denominated green sovereign bond issuance following its April 2025 London debut. The deal reflects China’s March 2026 pledge to expand international ESG debt market activity and deepen the offshore yuan bond market. For fixed-income investors, the issuance signals continued sovereign green bond market development in Asia and growing Chinese government appetite for international ESG capital market engagement–according to Bloomberg. This would also align with World Bank and Ministry of Finance data showing sovereigns accounted for 45% of labeled bond issuance in the first quarter of 2026, with emerging-market sovereigns such as Mexico, Chile, and Thailand leading volumes. China’s return is a notable addition to that group.

S-T Relative Performance of Selected Sustainable Indices vs. Conventional Indices to 4/30/2026 

Markets in Review. April delivered a powerful rebound in global equities following the geopolitical shock that battered markets in March. 

U.S. Equities.  US stocks led the charge, with the S&P 500 surging 10.4%, its best monthly return this year and its best month since November 2020.  At the same time, the Nasdaq Composite Index jumped 15.3% and the Dow Jones Industrial Average gained 7.2%. Small caps joined the rally, with the Russell 2000 Index posting a gain of 12.2%. The drivers were a resumption of AI-related optimism, an Iran ceasefire that calmed Persian Gulf tensions, and a strong Q1 earnings season in which 50 of 53 Nasdaq-100 reporters beat EPS expectations by an average of 16%, prompting upward revisions to full-year estimates. Technology and semiconductors led, with the Nasdaq-100 Tech Sector up 23.5%, while Health Care lagged as investors rotated into higher-beta growth names.

International Equities. International equities also recovered, registering a gain of 9.7% according to the MSCI ACWI ex USA Index, with developed markets outperforming US large caps as a weaker dollar and cheaper valuations drew flows into European and Japanese shares. Emerging markets continued their relatively resilient run, gaining 14.7%, after a punishing March during which the MSCI Emerging Markets Index gave up 13.1%. 

Bonds. Bonds were more subdued, with the Bloomberg US Aggregate Bond Index adding 0.11% in April. The 10-year Treasury yield ranged during the month between 4.26% and a high of 4.40% at month end before drifting higher into early May, while the 30-year almost reached 5.0% (reaching 5.18% by the third week in May) on renewed inflation fears fed by rising fuel prices and ongoing fiscal concerns and amid persistent foreign selling, including from the People’s Bank of China. International sovereign bonds faced similar pressure as long-end yields stayed elevated.

Sustainable mutual funds and ETFs.  Labeled sustainable long-term mutual funds and ETFs participated meaningfully in the rally, gaining an average of 7.3% in April and 6.02% year-to-date.  ETFs, with their greater overall exposure to riskier equities, added an average of 8.8% while mutual funds recorded an average gain of 7.0%.  U.S equity and international ETFs delivered even higher gains. Thematic clean-energy and smart-grid funds extended strong trailing-12-month gains, while sustainable taxable bond funds posted more modest returns, gaining an average of 0.57% and 0.30% year-to-date.   

Near-term results posted by selected sustainable indices. Three of six MSCI sustainable indices outperformed their conventional counterpart in April. These Selection indices are chosen to represent a broad cross section of the sustainable investing market segment using ESG criteria and exclusions while maintaining sector weight exposures corresponding to counterpart conventional indices. The one-month results reflected an improvement over the outperformance/underperformance record registered during the first three months of the year. Outperformance in April was recorded by the MSCI USA Selection Index, MSCI EAFE Selection Index and the Bloomberg MSCI US Aggregate ESG Focus Index that eclipsed their conventional counterparts by 1.29%, 0.36% and .01%, in that order.  Only two of these benchmarks, namely the MSCI USA Selection Index and the Bloomberg MSCI US Aggregate ESG Focus Index, also led during the trailing 12-month interval. That said, the one-year results posted by the MSCI USA Small Cap Selection Index and MSCI Emerging Markets Selection Index reflected wide negative 7.32% and 7.02% variations relative to their conventional counterparts.   

Intermediate-to-long term results posted by sustainable indices.  The MSCI USA Selection Index continues through the month of April to be the only one of the five stock-oriented benchmarks that is posting consistent outperformance results over the three-, five- and ten-year intervals. 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 intervals that it’s been calculated, often times achieving the same results or, if they vary, the results deviate by no more than one to two basis points in either direction.