Abstract
ABSTRACTWe provide an holdings‐based analysis of socially responsible investment (SRI hereafter) funds' greenness and its determinants in Europe over 8 years (2015–22). To this end, a segmentation of SRI funds by greenness degree based on k‐means clustering is developed. Our results reveal that SRI funds' greenness depends on specific investment styles and the salient experience of managers in SRI. We verify that greening an SRI fund implies a higher stock selectivity leading managers to underweight their portfolios with fossil fuel stocks and raise the weight of green stocks once SRI market regulations in Europe have been implemented. Also, we find that active investment styles make SRI funds greener. Moreover, we provide evidence of counteracting experience effects provided that the more (resp. less) the manager is experienced in SRI (resp. mutual fund industry), the greener the fund is. In addition to those experience effects, we detect a gender diversity effect provided that a greater gender diversity in fund management teams contributes to increase SRI funds' greenness. Overall, our findings support the argument that the experience and abilities of fund managers are important factors for investors to consider when they choose SRI funds notably because skilled professionals with more experience in SRI are more likely to adapt to regulatory shifts.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
