What attracts sustainable fund flows? Prospectus versus ratings*

Kevin Birk (), Stefan Jacob and Marco Wilkens
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Kevin Birk: University of Augsburg
Stefan Jacob: University of Augsburg
Marco Wilkens: University of Augsburg

Journal of Asset Management, 2025, vol. 26, issue 2, No 6, 216-237

Abstract: 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.

Keywords: Sustainable finance; ESG; Investment funds; Fund flows; Sustainability information; Retail and institutional investors (search for similar items in EconPapers)
JEL-codes: G11 G23 G41 G59 Q01 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1057/s41260-024-00389-6

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