Even though "green" and other "ethical" funds only account for a tiny share of the world's investment universe, they have substantially outperformed other assets during the Covid crisis, according to a new study.

According to the Institute for International Finance, its sample of 41 sustainable equity indices - those that use environmental, social and corporate governance (ESG) metrics - showed that three quarters had outperformed their more traditional peers by eight percentage points this year.

"The resilience of ESG equity indices was even more striking during the sharp Covid-19 sell-off in risk assets in the first quarter of 2020: 85pc outperformed their broad market counterparts," said the body which represents the world's largest banks and funds.

March’s record selloff in emerging-market stocks and bonds has gone into reverse. But overseas investors are flocking only to the least risky assets in the least troubled regions, suggesting their worries haven’t been put completely to rest.

Emerging-market countries including India, China, Brazil and Russia saw nonresident investors buy a total $4.1 billion of their stocks and bonds in May, according to data from the Institute of International Finance. But those investors have also been careful to differentiate between regions...