Navigating the Financial Currents This World Oceans Day

On June 8th, communities around the world raised flags, launched parades of boats, and hosted global dialogues to celebrate World Oceans Day 2025 under the hopeful theme: "Wonder: Sustaining What Sustains Us." The message was clear — humanity depends on healthy oceans, and this moment was about recognition, commitment, and shared awe.

Yet, while the global signal of unity was strong, a quieter financial current told a different story — one of retreat, not reinvestment.

The Vanishing Ocean Funds

Beneath the tide of global celebration, a quiet but significant development unfolded in U.S. financial markets: the liquidation of the only two dedicated ocean investment funds — the KraneShares Rockefeller Ocean Engagement ETF and the NYLI Clean Ocean Fund. Combined, these funds had less than $10 million in assets under management (AUM), and both shut down in the span of two months.

According to SustainableInvest.com, which tracks sustainable fund activity, this marks a sobering inflection point. These funds weren’t general ESG baskets — they were uniquely ocean-centric, designed to allocate capital to companies advancing cleaner oceans, ocean-related sustainability, or technologies that directly benefit marine ecosystems.

Their disappearance is more than just a data point. It's a signal that one of the most direct channels for investors to support ocean health through public markets has dried up.

Why the Waters Dried Up

So why would such mission-driven funds falter, especially as awareness of ocean issues surges?

Henry Shilling, President of Sustainable Research and Analysis LLC, offers a frank assessment: “Their liquidation highlights once again the risks of investing in funds that fail to grow assets under management and achieve scale.”

Translation: small funds struggle — not just because of market dynamics, but because of structural limitations:

• High Expense Ratios: Small funds typically cost more to run, reducing investor returns.

• Liquidity Issues: Less capital makes trading less efficient and can worsen volatility.

• Lack of Diversification: Fewer assets mean less risk spreading — often translating to poor performance.

• Sudden Shutdowns: When these funds close, they can leave investors exposed and unprepared.

This matters because performance begets performance in the investment world. Funds under $10 million are often seen as too risky, creating a catch-22: investors won’t commit until the fund scales, but the fund can’t scale without committed investors.

A Political Undertow

Compounding these challenges is the political backlash against ESG investing in the U.S., which has created a chill across the sustainable fund landscape. According to SustainableInvest.com, this has led to tepid fund flows, fewer launches, and increased closures. It's been particularly hard on small fund firms, who often lead with innovation but lack the deep pockets to weather long-term headwinds.

In fact, of the 25 smallest sustainable fund firms in 2024 — all with under $10 million in combined AUM — nearly half shuttered operations in the past year. That number climbs to 60% among the 10 smallest.

Signal vs. Noise: A Framework for Understanding

This landscape invites a deeper question: Are we misreading the signals?

In data science, signal-to-noise ratio (SNR) is about clarity — isolating meaningful information from background interference. Apply that concept to ocean investment:

• The “Signal”: The scientific urgency. The technological innovation. The global appetite for action, as seen on World Oceans Day.

• The “Noise”: Market turbulence. Political backlash. Shaky fund mechanics. Even greenwashing, which obscures genuine efforts behind vague branding.

Right now, the noise seems to be winning.

That’s not a failure of passion or science — but a failure of financial infrastructure to provide clear, resilient pathways for impact-focused investors.

Why This Matters for Innovation

Small, thematic funds often offer something rare: access to cutting-edge ideas. These include new solutions for sustainable food systems, biodegradable materials, carbon reduction, and yes — ocean restoration.

When niche funds vanish, we don’t just lose a product — we lose a pipeline. One that connects capital with creativity, funding the frontier ideas that larger, risk-averse funds may avoid.

Shilling advises investors to be cautious with small, emerging funds unless they’re backed by large, established firms — or until they hit an AUM threshold of $30 to $50 million. That’s wise advice. But it also raises a question: How do we nurture bold ideas if the system penalizes their early stages?

Navigating the Future

The vibrant energy of World Oceans Day shouldn’t be dismissed as symbolic. It’s part of a crucial global awakening. But if we truly want to “sustain what sustains us,” our financial systems must evolve to meet that ambition.

That could mean:

• Expanding blended finance models that combine private, public, and philanthropic capital.

• Developing new platforms that connect retail investors to vetted, mission-aligned ventures.

• Rethinking risk assessment frameworks to account for long-term environmental value, not just short-term returns.

As we look toward the UN Ocean Conference in Nice, the question isn’t just about government commitments. It’s also about how we build and sustain investment pathways that align with planetary priorities, not just quarterly profits.

Because if the signal is clear — and we believe it is — then our job is to amplify it, protect it, and ensure it doesn’t get lost in the noise.

Citations:

• Net assets as of April 30, 2025. Fund asset data and quotes sourced from SustainableInvest.com and Morningstar.

• Quote and analysis by Henry Shilling, Sustainable Research and Analysis LLC.