Low carbon transition risk in mutual fund portfolios: Managerial involvement and performance effects

Transitioning to a low‐carbon economy to mitigate the effects of climate change involves risks. We investigate the effects of managerial ownership and management on the low carbon transition risk of mutual fund portfolios and the effects of low carbon transition risk on mutual fund performance and f...

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Veröffentlicht in:Business strategy and the environment 2022-03, Vol.31 (3), p.950-968
Hauptverfasser: Reboredo, Juan C., Otero González, Luis A.
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Otero González, Luis A.
description Transitioning to a low‐carbon economy to mitigate the effects of climate change involves risks. We investigate the effects of managerial ownership and management on the low carbon transition risk of mutual fund portfolios and the effects of low carbon transition risk on mutual fund performance and flows. Using low carbon transition risk ratings based on the unmanaged carbon risk of the companies included in fund portfolios, we find that managerial ownership and the socially responsible focus of the fund reduce fund portfolio exposure to carbon risk, whereas active management has the opposite effect. Furthermore, we find that funds with low carbon transition risk produce a better risk‐adjusted performance are more sensitive to tail risks and exhibit a better fund flow performance.
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subjects Carbon
carbon transition risk
Climate change
Climate effects
Investments
manager ownership
mutual fund flows
mutual fund performance
Mutual funds
Ownership
Portfolios
Risk
Risk reduction
socially responsible investment
title Low carbon transition risk in mutual fund portfolios: Managerial involvement and performance effects
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