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What attracts sustainable fund flows? Prospectus versus ratings

Author

Listed:
  • Kevin Birk

    (University of Augsburg)

  • Stefan Jacob

    (University of Augsburg)

  • Marco Wilkens

    (University of Augsburg)

Abstract

Many studies indicate that sustainability ratings attract high fund flows, reinforcing the dominant role of rating agencies for the fund industry. However, these studies neglect prospectus information, which is very likely to influence investors' decisions. By analyzing 23,606 equity mutual funds and ETFs, we find that self-declared sustainability statements in fund prospectus are the main driver of retail and institutional fund flows. Additionally, sustainability references in the fund name and the fund’s employed sustainability investment approach significantly affect flows. External sustainability ratings on the other hand appear to be less relevant for fund flows than previous studies suggest.

Suggested Citation

  • Kevin Birk & Stefan Jacob & Marco Wilkens, 2025. "What attracts sustainable fund flows? Prospectus versus ratings," Journal of Asset Management, Palgrave Macmillan, vol. 26(2), pages 216-237, March.
    • Handle: RePEc:pal:assmgt:v:26:y:2025:i:2:d:10.1057_s41260-024-00389-6
    DOI: 10.1057/s41260-024-00389-6
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    More about this item

    Keywords

    Sustainable finance; ESG; Investment funds; Fund flows; Sustainability information; Retail and institutional investors;
    All these keywords.

    JEL classification:

    • 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
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G59 - Financial Economics - - Household Finance - - - Other
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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