European Green Mutual Fund Performance: A Comparative Analysis with their Conventional and Black Peers

We conduct the first comparative analysis of the financial performance of European green, black (fossil energy and natural resource) and conventional mutual funds. Based on a unique dataset of 175 green, 259 black and 976 conventional mutual funds, the investigation contrasts the financial performan...

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Bibliographic Details
Published in:Journal of business ethics 2017-10, Vol.145 (2), p.337-355
Main Authors: Ibikunle, Gbenga, Steffen, Tom
Format: Article
Language:English
Subjects:
Black people
Business and Management
Business Ethics
Comparative analysis
Education
Energy
Ethics
Financial performance
Growth stocks
Investments
Management
Mutual funds
Peers
Philosophy
Quality of Life Research
Risk
Risk adjustment
Stocks
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Summary:We conduct the first comparative analysis of the financial performance of European green, black (fossil energy and natural resource) and conventional mutual funds. Based on a unique dataset of 175 green, 259 black and 976 conventional mutual funds, the investigation contrasts the financial performance of the three dissimilar investment orientations over the 1991-2014 period. Over the full sample period, green mutual funds significantly underperform relative to conventional funds, while no significant risk-adjusted performance differences between green and black mutual funds could be established during the same period. Environmentally friendly investment vehicles display a significant exposure to small cap and growth stocks, while black funds are more exposed to value stocks. Remarkably, the green funds' risk-adjusted return profile progressively improves over time until no difference in the performance of the green and the conventional classes could be discerned. Further evidence suggests that the green funds are beginning to significantly outperform their black peers, especially over the 2012-2014 investment window.
ISSN:0167-4544
1573-0697
DOI:10.1007/s10551-015-2850-7