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Is there a green fund premium? Evidence from twenty seven emerging markets

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  • Naqvi, Bushra
  • Mirza, Nawazish
  • Rizvi, Syed Kumail Abbas
  • Porada-Rochoń, Małgorzata
  • Itani, Rania

Abstract

The popularity of green energy-based investments has spurred, notably during the last decade. This is mainly due to the positive socio-economic externalities and an increase in the financing flow. This paper assesses the financial performance and managerial abilities of green funds and their conventional peers. Using a comprehensive data set of 2339 funds across twenty-seven emerging markets, we report that traditional energy funds outperform renewable funds. Further, while conventional fund managers exhibit market and volatility timing, we cannot deduce any support for the same in the case of renewables. These results indicate disincentives for investors who would like to go green. Finally, the performance of renewable funds degraded during Covid-19, highlighting the additional investment drag. We propose that immediate legislative, governance, and regulatory interventions are warranted to promote a sustainable financial system.

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  • Naqvi, Bushra & Mirza, Nawazish & Rizvi, Syed Kumail Abbas & Porada-Rochoń, Małgorzata & Itani, Rania, 2021. "Is there a green fund premium? Evidence from twenty seven emerging markets," Global Finance Journal, Elsevier, vol. 50(C).
    • Handle: RePEc:eee:glofin:v:50:y:2021:i:c:s1044028321000545
    DOI: 10.1016/j.gfj.2021.100656
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    More about this item

    Keywords

    Green finance; Renewables; Market timing; Volatility timing;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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