How Do Socially Responsible Investment Funds Go Green? The Influence of Investment Styles and managers' Experience
Mathieu Mercadier, Yves Rannou, Mohamed Amine Boutabba, Jinzhao Chen
Finance and Economics
Business School
Abstract

This paper provides a holdings-based analysis of socially responsible investment (SRI hereafter) funds' greenness and its determinants in Europe over 8?years (2015–22). To this end, a segmentation of SRI funds by greenness degree based on k-means clustering is developed. The results reveal that SRI funds' greenness depends on specific investment styles and the salient experience of managers in SRI. It verifies that greening an SRI fund implies a higher stock selectivity leading managers to underweight their portfolios with fossil fuel stocks and raise the weight of green stocks once SRI market regulations in Europe have been implemented. Also, it finds that active investment styles make SRI funds greener. 大发体育在线_大发体育-投注|官网over, it provides evidence of counteracting experience effects provided that the more (resp. less) the manager is experienced in SRI (resp. mutual fund industry), the greener the fund is. In addition to those experience effects, the team detects a gender diversity effect provided that a greater gender diversity in fund management teams contributes to increase SRI funds' greenness. Overall, the findings support the argument that the experience and abilities of fund managers are important factors for investors to consider when they choose SRI funds notably because skilled professionals with more experience in SRI are more likely to adapt to regulatory shifts.