Green Energy Funds’ Assets Under Management Decrease in 2024 Due to High Rates and Trump Inauguration

In 2024, investors pulled about $30 billion from climate-focused mutual funds, reversing a four-year boom. In recent years, assets under management had increased significantly, reaching a record $541 billion. However, in the past year, green energy funds assets have fallen to $533 billion, with global sales falling from $151 billion in 2021 to just $29 billion in redemptions in 2024.

Among the main reasons are the increase in interest rates that have made companies with high capital costs, such as those in renewable energy and green technology, less attractive; the election of Donald Trump, with his skeptical stance on climate change and the threat to repeal the Inflation Reduction Act ( IRA ), which has created uncertainty about green investments; and finally the general anti-ESG political wave by Republican states.

Green energy funds assets have fallen to $533 billion, with global sales falling from $151 billion in 2021

Despite this, funds with a broader climate focus, such as green bonds or low-carbon transitions, performed well and even better than the overall market (13.16% versus 12.08%). However, funds specifically tied to clean energy and green technology suffered losses (-5.35%).

And while data for 2014 shows that 81 climate funds have closed or merged, up from 49 in 2023, and only 74 new funds have been launched, compared to 295 in 2022, recent estimates show that by 2030 the world will need $6.7 trillion annually for climate action. Annual climate finance doubled from 2018 to 2022, reaching $1.46 trillion, but less than half of that comes from the private sector, with much of the investment going to specific projects rather than equity markets.

In contrast, demand from institutional investors, such as pension funds, has remained strong, and industry experts have noted that institutional investor interest is growing rapidly.

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(Featured image by Sungrow EMEA via Unsplash)

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