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Mutual Fund Trading and ESG Clientele

European Corporate Governance Institute – Finance Working Paper No. 782/2021

45 Pages Posted: 23 Aug 2021 Last revised: 12 May 2023

See all articles by Rui A. Albuquerque

Rui A. Albuquerque

Boston College, Carroll School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Yrjo Koskinen

Haskayne School of Business, University of Calgary; European Corporate Governance Institute (ECGI)

Raffaele Santioni

Bank of Italy

There are 3 versions of this paper

Date Written: May 11, 2023

Abstract

This paper studies trading behavior of actively managed equity mutual funds comparing Environmental, Social and Governance (ESG) and conventional funds during a market collapse. Using monthly holdings data and the COVID-19 market crash as a quasi-natural experiment, we find that ESG funds maintained a stable share of their portfolio in ESG stocks in response to fund outflows during the crash. In contrast, conventional funds, who experienced outflows the most, increased their net sales to flows for ESG and non-ESG stocks. Results are consistent with ESG funds catering to their clientele in market downturns, contributing to market stability for ESG stocks.

Keywords: Environmentalandsocialresponsibility,clienteleeffects,investorhorizon,fund flows, greenwashing

JEL Classification: G01, G12, G23, G32, M14

Suggested Citation: Suggested Citation

Albuquerque, Rui A. and Koskinen, Yrjo J and Santioni, Raffaele, Mutual Fund Trading and ESG Clientele (May 11, 2023). European Corporate Governance Institute – Finance Working Paper No. 782/2021, Available at SSRN: https://ssrn.com/abstract=3908464 or http://dx.doi.org/10.2139/ssrn.3908464

Rui A. Albuquerque (Contact Author)

Boston College, Carroll School of Management ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

HOME PAGE: http://sites.google.com/view/ruialbuquerque/home

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Yrjo J Koskinen

Haskayne School of Business, University of Calgary ( email )

SH 154, 2500 University Drive NW
Calgary, Alberta T2N 1N4
Canada
+1-403-220-5540 (Phone)

HOME PAGE: http://https://profiles.ucalgary.ca/yrjo-koskinen

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
Brussels
Belgium

HOME PAGE: http://https://ecgi.global/users/yrj%C3%B6-koskinen

Raffaele Santioni

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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