This study investigates the association among management fees, ESG scores, and investment performance of ESG funds in China. It explores the significance of comprehending the cost–benefit analysis ...and long-term yields associated with sustainable investing. The investigation specifically concentrates on China’s open-end equity funds and uncovers some noteworthy discoveries. Initially, funds with higher management fees tend to yield greater returns, suggesting a potential validation for these fees. Nevertheless, when taking risk-adjusted metrics into account, these funds do not exhibit superior performance, indicating that the elevated fees may not necessarily result in enhanced performance after factoring in risk. Furthermore, the analysis discloses an adverse influence of ESG factors on fund performance. In general, the findings indicate that ESG funds in China do not impose higher management fees and do not ensure better returns but often produce superior risk-adjusted investment performance if their ESG scores are moderately higher. Exceptionally high ESG scores can end up with the worst risk-adjusted investment performance.
The mutual funds' returns, inter alia, are dependent on fund managers' performance. This makes human capital efficiency very central for consistent risk-adjusted performance. The persistence in ...performance becomes more critical during periods of high turbulence, like the one we are experiencing amidst the outbreak of Covid-19. In this research, we attempt to evaluate the performance of equity funds in massively impacted Latin American countries. These equity funds, with 95% of their investment in the infected region, are ranked as per their human capital efficiency using 2019 as the base year. Our findings demonstrate that funds with higher human capital efficiency significantly outperform their counterparts that rank lower on human capital efficiency. These findings remained consistent for the sub-periods that we specify to map the evolution of Covid-19. We conclude that equity funds should enhance their human capital efficiency to endure resilience amid macroeconomic shocks.
This study measures the financial impact of screening for environmental, social and governance criteria on corporate bond portfolios. Specifically, the risk-adjusted financial performance of 103 ...socially responsible bond funds in the US and the Eurozone is compared with a matched sample of conventional funds. During the period 2001–2014, socially responsible bond funds outperform by one-half of one percent annually. An evaluation of fund holdings and a performance-attribution analysis suggest that this outperformance is directly related to the mitigation of ESG risks, which is achieved by the exclusion of corporate bond issuers with poor corporate social responsibility activities. A separation of crisis and non-crisis periods further indicates that the outperformance is especially likely to occur during recessions or bear market periods. We confirm this crisis-related return effect from a sample of socially screened bond indices. Moreover, our results are robust to alternative definitions of sustainability, survivorship bias, fund characteristics and stable in the US and Eurozone sub-samples.
Britain is a society increasingly divided between the super-affluent and the impoverished. A Sharing Economy proposes radical new ways to close the growing income gap and spread social opportunities. ...Drawing on overseas examples, Stewart Lansley argues that mobilising the huge financial potential of Britain s public assets could pay for a pioneering new social wealth fund. Such a fund would boost economic and social investment, and, by building the social asset base, simultaneously strengthen the public finances. A powerful new policy tool, such funds would ensure that more of the gains from economic activity are shared by all and not colonised by a powerful few. This is a vital new contribution to the pressing debate on how to reduce inequality and combat austerity.
Although the academic interest in ethical mutual fund performance has developed steadily, the evidence to date is mainly sample-specific. To tackle this critique, new research should extend to ...unexplored countries. Using this as a motivation, we examine the performance and risk sensitivities of Canadian ethical mutual funds vis-à-vis their conventional peers. In order to overcome the methodological deficiencies most prior papers suffered from, we use performance measurement approaches in the spirit of Carhart (1997, Journal of Finance 52(1): 57-82) and Ferson and Schadt (1996, Journal of Finance 51(2): 425-461). In doing so, we investigate the aggregated performance and investment style of ethical and conventional mutual funds and allow for time variation in the funds' systematic risk. Our Canadian evidence supports the conjecture that any performance differential between ethical mutual funds and their conventional peers is statistically insignificant.
Past research has shown that new firms can facilitate resource mobilization by signaling their unobservable quality to prospective resource providers. However, we know less about situations in which ...firms convey multiple signals of different strengths-that is, signals that are more- or less-correlated with unobservable firm quality. Building on a sociocognitive perspective, we propose that prospective resource providers respond differently to signals of different strengths and that the effectiveness of signals, especially weak signals, will be contingent on the media attention new firms receive. Empirically, we conduct a longitudinal analysis examining the ability of new private equity firms to raise a follow-on fund. Consistent with our theory, we find that unrealized performance, a relatively weak signal, positively influences fundraising. However, we fail to find statistical evidence that its effect is weaker than that of realized performance, a relatively strong signal. Further, media attention strengthens the relationship between unrealized performance and fundraising, but media attention exerts less impact on the relationship between realized performance and fundraising. Taken together, our findings deepen our understanding of how new firms can mobilize resources with signals of different strengths and of how the media-as a key information intermediary-differently impacts their effectiveness.
We examine whether mutual funds change their names to take advantage of current hot investment styles, and what effects these name changes have on inflows to the funds, and to the funds' subsequent ...returns. We find that the year after a fund changes its name to reflect a current hot style, the fund experiences an average cumulative abnormal flow of 28%, with no improvement in performance. The increase in flows is similar across funds whose holdings match the style implied by their new name and those whose holdings do not, suggesting that investors are irrationally influenced by cosmetic effects.
This Article offers a broad theory of what distinguishes investment funds from ordinary companies, with ramifications for how these funds are understood and regulated. The central claim is that ...investment funds (i.e., mutual funds, hedge funds, private equity funds, and their cousins) are distinguished not by the assets they hold, but by their unique organizational structures, which separate investment assets and management assets into different entities with different owners. In this structure, the investments belong to "funds," while the management assets belong to "management companies." This structure benefits investors in the funds in a rather paradoxical way: it restricts their rights to control their managers and to share in their managers' profits and liabilities. The fund investors accept these restrictions because certain features common to most investment funds make these restrictions efficient. Those features include powerful investor exit rights that substitute for control rights and economies of scope and scale that encourage managers to operate multiple funds at the same time. This understanding illuminates a number of key areas of contracting and regulation and refutes the claims of skeptics who say that fund investors would be better off if they employed their managers directly.
We examine the complementary and substitute effects of exchange-traded funds (ETFs) and two other investment vehicles: mutual funds (MFs) and closed-end funds (CEFs). Focusing on the capital flow ...into investment vehicles, we find a complementary effect between ETFs and MFs, and substitution effect between ETFs and CEFs. The complementarity and substitution effect remains robust when focusing on subsamples with different market conditions and fund management styles. We present further evidence that past inflows of the same investment vehicle are significantly correlated with current inflows. These findings have implications to both investors and regulators in understanding the interdependence of investment vehicles.
•We find a complementary effect between ETFs and MFs, and a substitution effect between ETFs and CEFs.•Our results are robust to different market conditions and fund management styles.•Outflow from one investment vehicle does not explains the flow into another investment vehicle.•We find the differences in size do influence the interdependence of investment vehicles.•We find lagged fund flows to be a significant predictor of current fund flows.
Can water mutual funds aid sustainable development? Ibikunle, Gbenga; Martí‐Ballester, Carmen‐Pilar
International journal of finance & economics/International journal of finance and economics,
January 2022, 2022-01-00, 20220101, Letnik:
27, Številka:
1
Journal Article
Recenzirano
Odprti dostop
We conduct the first comparative analysis of the financial performance of global water mutual funds with conventional, ecology and natural resources mutual funds. Based on a unique sample of 88 ...water, 198 ecology, 370 natural resources, and 7,437 conventional mutual funds covering the 2008–2017 period, we contrast the financial performance of these four different fund types. On average, water mutual funds perform comparably to conventional mutual funds and outperform ecology and natural resources funds. The performance dynamics is linked to the state of the economy, such that the outperformance by water mutual funds is not observed when markets are bearish. Overall, fund risk‐adjusted performance is predominantly driven by investor activity, especially with regards to their perception of environmental regulatory risk profiles of funds' constituents.
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