ESG Mutual Fund Attributes and Investor Behavior

Bertrand Candelon () and Jean-Baptiste Hasse ()
Additional contact information
Bertrand Candelon: Université catholique de Louvain, LIDAM/LFIN, Belgium
Jean-Baptiste Hasse: Aix-Marseille University

No 2026001, LIDAM Discussion Papers LFIN from Université catholique de Louvain, Louvain Finance (LFIN)

Abstract: In this paper, we investigate investor behavior related to the attributes of ESG mutual funds. Specifically, we examine whether financial and extrafinancial attributes enter the investor’s decision problem additively or interact multiplicatively. We derive the return elasticity of investor demand under both hypotheses, which yields distinct predictions for the flow-performance relationship. Using a dataset of 6,965 European active equity mutual funds from August 2018 to June 2025, we empirically test these competing hypotheses. Our results indicate that the sensitivity of fund flows to lagged returns is greater for ESG funds than for conventional funds. Accordingly, we reject specifications in which financial and extrafinancial attributes enter the investor’s decision problem additively. Our findings provide new insights into investor demand for fund attributes and ESG-washing practices.

Keywords: Sustainable investing; Mutual funds; Investor behavior; Cash flows (search for similar items in EconPapers)
Pages: 31
Date: 2026-03-05
New Economics Papers: this item is included in nep-fmk
References: Add references at CitEc
Citations:

Downloads: (external link)
https://dial.uclouvain.be/pr/boreal/en/object/bore ... tastream/PDF_01/view (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ajf:louvlf:2026001

Access Statistics for this paper

More papers in LIDAM Discussion Papers LFIN from Université catholique de Louvain, Louvain Finance (LFIN) Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Séverine De Visscher ().