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Do investors pay a premium for going green? Evidence from alternative energy mutual funds

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  • Reboredo, Juan C.
  • Quintela, Miguel
  • Otero, Luis A.

Abstract

We studied the financial performance of alternative energy mutual funds using multifactor models and propensity score matching techniques. For a sample of alternative energy mutual funds quoted in EUR and in USD for the period 2010–2016, we found that alternative energy funds underperformed corporate and socially responsible mutual funds in terms of returns and downside risk protection. Our results are consistent with the idea that investors are paying a premium for going green via renewable energies.

Suggested Citation

  • Reboredo, Juan C. & Quintela, Miguel & Otero, Luis A., 2017. "Do investors pay a premium for going green? Evidence from alternative energy mutual funds," Renewable and Sustainable Energy Reviews, Elsevier, vol. 73(C), pages 512-520.
    • Handle: RePEc:eee:rensus:v:73:y:2017:i:c:p:512-520
    DOI: 10.1016/j.rser.2017.01.158
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    More about this item

    Keywords

    Alternative energy mutual fund; Renewables; Jensen's alpha; Downside risk;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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