ESG-focused Impax Asset Management has reported an uptick in assets under management (AUM) as the wider sector grapples with higher outflows from sustainable funds.
In a trading update ahead of its annual general meeting, the AIM-listed company said its AUM totalled £39.2bn on 29 February 2024.
This figure is up £100m from the £39.1bn Impax had in AUM on 31 December 2023, the end of its first quarter.
Impax has been affected by the shift away from ESG over the past couple of years, with its share price down 69 per cent since its peak at the end of December 2021.
The strong performance of oil and gas firms after the war in Ukraine and a growing political backlash and regulatory issues have made investors question the ‘environmental, social and governance’ label.
Analysts say the sector has likely reached a “saturation point” after years of investors scrambling to pump cash into responsible investment strategies.
Impax saw £1bn in outflows in its first quarter this year. Its most recent annual results reported a 28 per cent drop in pretax profit to £52.1m, also driven by rising costs.
Data published by Morningstar in January found that sustainable funds saw their first net redemptions ever in the last quarter of 2023.
ESG-focused funds experienced $2.5bn (£1.96bn) of outflows, as US investors pulled a record $5bn (£3.9bn), while European investors still invested $3.3bn (£2.6bn).
The success of passive strategies saved European ESG funds from greater outflows. These strategies gained $21.3bn (£16.7bn) of new money throughout the quarter, compared to passive strategies, which lost almost $18bn (£14.1bn).
Despite the outflows, sustainable funds globally saw their assets rise eight per cent over the quarter to nearly $3tn.
Impax announced in January that it had agreed to acquire the assets of Danish fixed income manager Absalon Corporate Credit, which totalled around £351m.