International Evidence on Managerial Skills of Green Mutual Funds

Abstract

Using an international sample of 60 green funds from 01 January 2010 to 31 December 2022, this study compares the managerial skills of green and matching conventional funds. Additionally, the study separately assesses how fund size and age affect the managerial abilities of both types of funds. The results suggest that fund’s green characteristic impacts managerial skills since green fund managers show better managerial skills than their conventional counterparts. Fund size influences managerial skills as small mutual funds are mainly responsible for the positive stock-selection skills in green and conventional fund managers. This paper also controls the results for the fund age effect and concludes that young and green funds possess better managerial skills than their older and conventional counterparts. The study reflects that green mutual fund, along with other green financial instruments, contribute to the global movement called “Sustainable Finance”, which aims to invest in public and private projects, therefore supporting mitigation and containment of climate change risks.