Sustainability Preferences Under Stress: Evidence from Mutual Fund Flows During COVID-19

76 Pages Posted: 21 Jul 2020 Last revised: 6 May 2021

See all articles by Robin Döttling

Robin Döttling

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM)

Sehoon Kim

University of Florida - Department of Finance, Insurance and Real Estate

Date Written: May 5, 2021

Abstract

We document fragile demand for socially responsible investments (SRI) by retail mutual fund investors. Using COVID-19 as an economic shock, we show funds with higher sustainability ratings experienced sharper declines in retail flows during the pandemic, controlling for fund characteristics. Contrasting resilience of institutional SRI fund flows, sharper declines in retail SRI flows to funds marketed in economies hit hardest by COVID-19, recovering SRI fund flows during reopening periods, and falling internet search traffic on sustainability during the pandemic indicate a high sensitivity of demand for SRI by retail investors with respect to income shocks.

Keywords: COVID-19, Mutual Fund Flows, Sustainable Investing, ESG, Socially Responsible Investing, SRI

JEL Classification: D62, G11, G14, G23, G41, I10, M14

Suggested Citation

Döttling, Robin and Kim, Sehoon, Sustainability Preferences Under Stress: Evidence from Mutual Fund Flows During COVID-19 (May 5, 2021). Available at SSRN: https://ssrn.com/abstract=3656756 or http://dx.doi.org/10.2139/ssrn.3656756

Robin Döttling

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-46
3000 DR Rotterdam, 3000 DR
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Sehoon Kim (Contact Author)

University of Florida - Department of Finance, Insurance and Real Estate ( email )

P.O. Box 117168
Gainesville, FL 32611
United States

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