Climate Risk Perception and Mutual Fund Flows Implications for Performance

41 Pages Posted: 7 Jun 2024

See all articles by Viktoriya Lantushenko

Viktoriya Lantushenko

Saint Joseph's University

Gulnara R. Zaynutdinova, Ph.D.

West Virginia University, Department of Finance

Abstract

We extract the sensitivity of mutual fund flows to negative climate change news, accounting for investor sentiment, past fund performance, and past fund flow. The resulting measure, climate-risk-flow sensitivity, positively predicts the cross section of mutual fund returns. This predictability is most pronounced in funds that experience inflows in response to negative climate-related news and those with stronger stock-selection abilities. Our results are robust and not driven by top-performing sustainable funds, long-term or recent fund performance, investor sentiment, or funds from the largest mutual fund families. Our findings offer important implications for understanding the impact of public climate change concerns on mutual fund performance.

Keywords: Climate change risk, mutual funds, negative climate news, fund flows, fund performance

Suggested Citation

Lantushenko, Viktoriya and Zaynutdinova, Gulnara R., Climate Risk Perception and Mutual Fund Flows Implications for Performance. Available at SSRN: https://ssrn.com/abstract=4857467 or http://dx.doi.org/10.2139/ssrn.4857467

Viktoriya Lantushenko (Contact Author)

Saint Joseph's University ( email )

5600 City Avenue,
Philadelphia, PA 19131
United States

Gulnara R. Zaynutdinova

West Virginia University, Department of Finance ( email )

John Chambers College of Business and Economics
Morgantown, WV 26506
United States

HOME PAGE: http://https://business.wvu.edu/

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