Sustainability and Private Wealth Investment Flows

73 Pages Posted: 11 May 2020 Last revised: 25 Feb 2021

See all articles by Amir Amel-Zadeh

Amir Amel-Zadeh

University of Oxford - Said Business School

Rik Lustermans

Erasmus University Rotterdam (EUR), Erasmus School of Economics (ESE), Students; ABN AMRO - ABN-Amro Bank, The Netherlands

Mary Pieterse-Bloem

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Erasmus Research Institute of Management (ERIM)

Date Written: February 24, 2021

Abstract

This study examines the effect of sustainability ratings on wealthy retail investors’ asset allocation decisions. Using a proprietary dataset of monthly equity and bond holdings of European private wealth investors, we document significantly larger investment flows into assets with high sustainability ratings compared to those with low ratings. We further find that investors react to changes in sustainability ratings of their portfolio assets by rebalancing their portfolios towards assets with higher sustainability ratings. Exploiting a quasi-exogenous shock to the salience of sustainability ratings we document a plausibly causal effect of assets' sustainability ratings on wealthy retail investors' investment decisions. We do not find that the larger investments into assets with high sustainability ratings can be explained by differences in attention or news flow, or that they lead to significant differences in financial performance.

Keywords: Retail investors, household finance, sustainable investing, ESG, private wealth, private banking, investment flows

JEL Classification: G11, G14, G15, G29, G41, G50

Suggested Citation

Amel-Zadeh, Amir and Lustermans, Rik and Pieterse-Bloem, Mary, Sustainability and Private Wealth Investment Flows (February 24, 2021). Available at SSRN: https://ssrn.com/abstract=3576687 or http://dx.doi.org/10.2139/ssrn.3576687

Amir Amel-Zadeh (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

Rik Lustermans

Erasmus University Rotterdam (EUR), Erasmus School of Economics (ESE), Students ( email )

P.O. Box 1738
Rotterdam, NL 3062 PA
Netherlands

ABN AMRO - ABN-Amro Bank, The Netherlands ( email )

NL-1000 EA Amsterdam
Netherlands

Mary Pieterse-Bloem

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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