The Impact of the Morningstar Sustainability Rating on Mutual Fund Flows
Journal
European Financial Management
ISSN
1354-7798
Type
journal article
Date Issued
2019-06
Author(s)
Abstract
We examine the effect of the introduction of Morningstar’s Sustainability Rating in March 2016 on U.S. mutual equity fund flows. Using panel regressions, propensity score matching, and an event study methodology we find strong and robust evidence that retail investors shift money away from low-rated and into high-rated funds. The effect is driven by the publication of the Morningstar Sustainability Rating and not due to a general attractiveness of sustainable funds. Institutional investors do not react to the publication of the Rating. We estimate that an average high-rated retail fund receives between $ 4.1 million and $ 10.1 million higher inflows and an average low-rated retail fund suffers from $ 1.0 million to $ 5.0 million lower net flows than an average-rated fund during the first year after the Rating was published.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
None
Refereed
Yes
Publisher
Blackwell
Volume
25
Number
3
Start page
520
End page
553
Subject(s)
Eprints ID
254186
File(s)![Thumbnail Image]()
Name
Paper.pdf
Size
337.67 KB
Format
Adobe PDF
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