Publication: Low carbon mutual funds
Low carbon mutual funds
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Ceccarelli, M., Ramelli, S., & Wagner, A. (2024). Low carbon mutual funds. Review of Finance, 28, 45–74. https://doi.org/10.1093/rof/rfad015
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Climate change poses new challenges for portfolio management. In our not-yet-low carbon world, investors face a trade-off between minimizing their exposure to climate risks and maximizing the benefits of portfolio diversification. This paper investigates how investors and financial intermediaries navigate this trade-off. After the release of Morningstar's novel carbon risk metrics in April 2018, mutual funds labeled as "low carbon" experienced a significant increase in investor demand, especially those with high risk-adjusted returns.
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Ceccarelli, M., Ramelli, S., & Wagner, A. (2024). Low carbon mutual funds. Review of Finance, 28, 45–74. https://doi.org/10.1093/rof/rfad015