Bias in ESG Funds

8 Pages Posted: 4 Oct 2018

See all articles by Nandita Das

Nandita Das

Delaware State University - Accounting and Finance Department

Aman Sunder

College for Financial Planning

Date Written: October 4, 2018

Abstract

Bias is very closely linked to the issue of performance persistence. The direction of the bias is not clear even for traditional mutual funds. This paper documents the bias in performance data for all funds with a sustainability mandate in MorningstarĀ® database. The performance of complete portfolio, surviving portfolio, disappeared funds, and new funds is studied. Mutual funds presumably change their mandate to be or not to be part of intentional sustainability mandate for two different reasons; lack of investment choice if they a have a sustainability mandate or to attract more investors by signaling their sustainability mandate. Two kinds of biases act in opposite direction. The overall direction of the bias depends on the relative magnitude of these two biases.

Keywords: Bias, Survivorship Bias, Sustainability, SRI, ESG, Socially-Conscious Mandate, Mutual Funds

Suggested Citation

Das, Nandita and Sunder, Aman, Bias in ESG Funds (October 4, 2018). 2019 Academic Research Colloquium for Financial Planning and Related Disciplines, Available at SSRN: https://ssrn.com/abstract=3260753

Nandita Das (Contact Author)

Delaware State University - Accounting and Finance Department ( email )

Dover, DE 19901
United States

Aman Sunder

College for Financial Planning ( email )

9000 E. Nichols Ave
STE 200
Centennial, CO 80112
United States
7853176604 (Phone)

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