Sustainable investing in Europe; evidence from fund flows and returns

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School of Business | Bachelor's thesis
Electronic archive copy is available locally at the Harald Herlin Learning Centre. The staff of Aalto University has access to the electronic bachelor's theses by logging into Aaltodoc with their personal Aalto user ID. Read more about the availability of the bachelor's theses.

Authors

Date

2021

Department

Rahoituksen laitos

Major/Subject

Mcode

Degree programme

Rahoitus

Language

en

Pages

24

Series

Abstract

I use European mutual fund flows and returns from August 2018 to December 2020 to study sustainable investing in Europe. I study how funds’ cash flows react to a low or a high sustainability rating from Morningstar and study how the overall cash flows between differently rated funds vary. I also study whether the high sustainability funds provide higher returns. I find evidence that investors prefer high sustainability funds as their cash flows are significantly higher both right after the release of the rating and overall. I also find significant evidence that sustainability is connected to higher returns. I am unable to find any evidence that the effect would be fading away but that cannot be said definitively as there is not enough data available. I discuss the possible reasons behind the higher cash flows and higher returns and the worrying result the higher cash flows could have.

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Thesis advisor

Joenväärä, Juha

Keywords

sustainability, fund flows, investing, fund returns, mutual funds, Morningstar

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Citation

Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-202105166749

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[kand] Kauppakorkeakoulu / BIZ