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Mutual Fund Trading and ESG Clientele During the COVID-19 Stock Market Crash

Author

Listed:
  • Albuquerque, Rui
  • Koskinen, Yrjo
  • Santioni, Raffaele

Abstract

This paper studies trading behavior of actively managed equity mutual funds comparing Environmental, Social and Governance (ESG) and conventional funds during a market collapse. Using monthly holdings data and the COVID-19 market crash as a quasi-natural experiment, we find that ESG funds maintained a stable share of their portfolio in ESG stocks in response to fund flows during the crash. In contrast, conventional funds, who experienced outflows the most, increased their net sales to flows for ESG and non-ESG stocks. Results are consistent with ESG funds catering to their clientele in market downturns, contributing to market stability for ESG stocks.

Suggested Citation

  • Albuquerque, Rui & Koskinen, Yrjo & Santioni, Raffaele, 2022. "Mutual Fund Trading and ESG Clientele During the COVID-19 Stock Market Crash," CEPR Discussion Papers 16477, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16477
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    More about this item

    Keywords

    Environmental and social responsibility; Clientele effects; Investor horizon; Fund flows; Stock market crash;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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