The UK Asset & Wealth Management newsletter and website is not investment advice. Please read the disclaimer here.
One data point does not make a trend. But the sudden turnaround in flows for US Sustainable Funds in Q2 certainly looks like a significant one.
It’s been a torrid few years for sustainable funds in the US. Investors have been withdrawing funds at pace. Under-performance in 2022, especially relative to oil & gas stocks following Russia’s invasion of Ukraine, was probably the first negative catalyst. Then the anti-woke, anti-ESG agenda really kicked in, and hasn’t abated.
But in Q2 of 2026, flows turned from sharply negative to sharply positive. And according to Morningstar’s Global Sustainable Fund Flows: Q2 2026, there was a very clear reason.
Clean Energy for AI Powers Inflows: Investor demand continued to reflect interest in energy transition infrastructure and technologies supporting rising power usage from AI and data centers.
It cites an example of the First Trust Nasdaq Clean Edge Smart Grid Infrastructure fund which recorded its fourth consecutive quarter of inflows, attracting US$3.1bn in Q2.
One to watch: London-listed Impax
A victim of the downturn in sustainable investing has been Impax Asset Management. Its share price has been hammered over the last few years.
And it is now the most lowly-valued London-listed asset manager by some distance (see my previous post below).
But Impax has a big US operation, generating over 40% of its revenue from North America.
And its products are certainly closely aligned to the drivers of the flow turnaround. For example, it recently launched the Impax Global Sustainable Infrastructure ETF, listed on NYSE Arca.
It’s too early to tell if the broader US sustainable flow trend is having a significant impact on Impax. Its net flows were still negative at group level in Q2, but parts of its US portfolio were showing signs of strength. Impax noted in its AUM update that its range of systematic equities strategies in the US recorded positive net flows.
If that single data point in the US does turn out to be the start of something bigger… then Impax could be one of the bigger beneficiaries.
One to watch.
Subscribe to UK Asset & Wealth Management to keep up to date with the UK asset and wealth management sectors.
And if you think UK Asset & Wealth Management is worth telling others about and sharing, I’d be most grateful if you do.
Disclosure: At the time of writing, Paul Bryant was a shareholder of Impax Asset Management and covered Impax Asset Management as an analyst on behalf of Equity Development Limited. Read Equity Development’s research on these companies by clicking on each. And please read this link for the terms and conditions of reading Equity Development’s research.