Responsible fund inflows hit record $40bn

Responsible investment funds in Australia and New Zealand grew to $233.3 billion at the end of June, up 15.1% over the year, as annual inflows hit an all-time high of $40.3 billion, according to new data from ISS and the Responsible Investment Association Australasia (RIAA).

The report was prepared by Plan For Life, an ISS Market Intelligence brand, which collects data directly from fund managers and publishes quarterly analysis on responsible investment funds.

Inflows rose 8.4% on the previous year, while outflows increased just 2.9%. Inflows climbed steadily from 2017 to a peak in 2022 and fell notably in 2023, before recovering over the past two years to the new high.

"Inflows into responsible products have experienced strong long-term growth - inflows over the past five years were 73% larger than those of the previous five years, and annual net flows having remained positive since 1999," the report read.

Responsible funds now account for 5.4% of the comparative market. The report defines that market as the sub-markets where responsible products sit, including wholesale and retail trusts, ETFs, retail, industry and public sector super, and New Zealand retail managed funds, rather than the total managed funds market.

"Over the June 2026 quarter investment markets were significantly positive, more than offsetting last quarter's negative result and maintaining a solid run of recording positive investment earnings for seven of the past 10 quarters," the report said.

Responsible funds trailed the broader market over every period except 10 years, the report found. Over three and five years the gap was 0.45% or less, though results varied widely by asset class.

In domestic equities, responsible funds beat the market by 0.7% over 10 years but lagged by 2% over three years and 2.4% over five. Responsible international equity funds outperformed by 0.5% over 10 years. Over three and five years they trailed only marginally, but over the past year the gap widened to 1.7%.

Managed balanced and managed growth funds followed the same pattern, outperforming only over 10 years. Balanced funds were ahead by 0.2% over a decade and behind by 1.7% over the year. Growth funds showed the widest swings: they were 2.4% ahead over 10 years and 6.1% behind over the past year.

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