Sustainable investing exchange-traded funds: US and European market - Publication - Bridge of Knowledge

Your account

login

Search

Sustainable investing exchange-traded funds: US and European market

Abstract

The key aim of the paper is to examine the diffusion of the sustainable investing exchange-traded funds (ETFs) on the European and US ETFs markets, with the special focus on the market shares of sustainable investing and conventional funds. The model of diffusion of innovation (logistic growth model) is applied. Monthly data on the assets of ETFs in the time period of 2006-2017 are used. Increasing assets of sustainable investing ETFs were identified in both examined regions. The average value of assets was higher in the United States, but the European market became larger in the late 2017. Exclusively for Europe, the diffusion of sustainable investing ETFs was confirmed for the entire analysed time period as the market share of this category was increasing in relation to the conventional funds. In the United States, the diffusion was short-lived and took place in the time period 2006-2008. Applied diffusion models assume an S-shaped trajectory of the innovation’s diffusion and the estimations are sensitive to historical data. It is the first study to apply the methodological framework of innovation diffusion for the examination of the sustainable financial products. It addresses an issue of switching between sustainable investing and conventional financial products that has not been examined previously.

Citations

  • 0

    CrossRef

  • 0

    Web of Science

  • 0

    Scopus

Author (1)

Cite as

Full text

download paper
downloaded 107 times
Publication version
Accepted or Published Version
License
Creative Commons: CC-BY-NC open in new tab

Keywords

Details

Category:
Articles
Type:
artykuły w czasopismach
Published in:
Journal of Economics and Management no. 37, pages 69 - 86,
ISSN: 1732-1948
Language:
English
Publication year:
2019
Bibliographic description:
Marszk A.: Sustainable investing exchange-traded funds: US and European market// Journal of Economics and Management -Vol. 37,iss. 3 (2019), s.69-86
DOI:
Digital Object Identifier (open in new tab) 10.22367/jem.2019.37.04
Bibliography: test
  1. Abner, D. (2016). The ETF handbook. How to value and trade exchange-traded funds (2nd ed.). Hoboken, New Jersey: John Wiley & Sons. http://doi.org/10.1002/9781119297727 open in new tab
  2. Agapova, A. (2011). Conventional mutual index funds versus exchange-traded funds. Journal of Financial Markets, 14(2). http://doi.org/10.1016/j.finmar.2010.10.005 open in new tab
  3. Alexopoulos, T. A. (2018). To trust or not to trust? A comparative study of conventional and clean energy exchange-traded funds. Energy Economics, 72, 97-107. http://doi.org/10.1016/j.eneco.2018.03.013 open in new tab
  4. Auer, B. R., & Schuhmacher, F. (2016). Do socially (ir)responsible investments pay? New evidence from international ESG data. The Quarterly Review of Economics and Finance, 59, 51-62. http://doi.org/10.1016/j.qref.2015.07.002 open in new tab
  5. Bioy, H., & Lamont, K. (2018, May). Passive sustainable funds. Morningstar Manager Research, 1-33. Retrieved from https://alphaarchitect.com/2019/06/10/passive- sustainable-funds/ open in new tab
  6. Borgers, A., Derwall, J., Koedijk, K., & Horst, J. (2015). Do social factors influence investment behavior and performance? Evidence from mutual fund holdings. Journal of Banking & Finance, 60, 112-126. open in new tab
  7. http://doi.org/10.1016/j.jbankfin.2015.07.001 open in new tab
  8. Busch, T., Bauer, R., & Orlitzky, M. (2016). Sustainable development and financial markets: Old paths and new avenues. Business & Society, 55(3), 303-329. http://doi.org/10.1177/0007650315570701 open in new tab
  9. Chen, X., & Scholtens, B. (2018). The urge to act: A comparison of active and passive socially responsible investment funds in the United States. Corporate Social Responsibility and Environmental Management, 25(6). open in new tab
  10. http://doi.org/10.1002/csr.1529 open in new tab
  11. Crigger, L. (2018, March). Where are the ESG flows? ETF Report, 6-8. open in new tab
  12. Derwall, J., Koedijk, K., & Ter Horst, J. (2011). A tale of values-driven and profit- seeking social investors. Journal of Banking & Finance, 35(8), 2137-2147. http://doi.org/10.1016/j.jbankfin.2011.01.009 open in new tab
  13. Djoutsa Wamba, L., Braune, E., & Hikkerova, L. (2018). Does shareholder-oriented corporate governance reduce firm risk? Evidence from listed European companies. Journal of Applied Accounting Research, 19(2), 295-311. open in new tab
  14. http://doi.org/10.1108/JAAR-02-2017-0033 open in new tab
  15. Dosi, G., & Nelson, R. R. (1994). An introduction to evolutionary theories in economics. Journal of Evolutionary Economics, 4(3), 153-172. open in new tab
  16. http://doi.org/10.1007/BF01236366 open in new tab
  17. ETFGI. (2018). Global ETF and ETP industry insights -June 2018. Retrieved from https://etfgi.com/research/report/19277/global-etf-and-etp-industry-insights-june- 2018 open in new tab
  18. Eurosif (2018). European SRI Study 2018. Retrieved from http://www.eurosif.org/wp- content/uploads/2018/11/European-SRI-2018-Study-LR.pdf open in new tab
  19. Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: Aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4), 210-233. http://doi.org/10.1080/20430795.2015.1118917 open in new tab
  20. Gastineau, G. L. (2010). The exchange-traded funds manual. Hoboken, New Jersey: John Wiley & Sons. open in new tab
  21. Global Sustainable Investment Alliance. (2017). 2016 Global Sustainable Review. Retrieved from http://www.gsi-alliance.org/wp- content/uploads/2017/03/GSIR_Review2016.F.pdf open in new tab
  22. Halbritter, G., & Dorfleitner, G. (2015). The wages of social responsibility -where are they? A critical review of ESG investing. Review of Financial Economics, 26, 25- 35. http://doi.org/10.1016/j.rfe.2015.03.004 open in new tab
  23. Hale, J. (2017). Sustainable Funds Start to Perform. Morningstar Research & Insights. Retrieved from http://www.morningstar.co.uk
  24. Hale, J. (2018, January). Sustainable funds U.S. landscape report. Morningstar Research, 1-48. Retrieved from https://cdn.ymaws.com/dciia.org/resource/collection/8606CD14-06A5-4277-9507- C397C1C8DEA0/Sustainable_Funds_Landscape_013018.pdf open in new tab
  25. Hill, J. M., Nadig, D., & Hougan, M. (2015). A comprehensive guide to exchange-traded funds (ETFs). Charlottesville, VA: CFA Institute Research Foundation. open in new tab
  26. Hull, I. (2016). The development and spread of financial innovations. Quantitative Economics, 7, 613-636. http://doi.org/10.3982/QE521 open in new tab
  27. Krosinsky, C. (2017). The seven tribes of sustainable investing. In C. Krosinsky & S. Purdom, Sustainable investing (pp. 29-32). London: Routledge. http://doi.org/10.4324/9781315558837 open in new tab
  28. Kwasnicki, W. (2013). Logistic growth of the global economy and competitiveness of nations. Technological Forecasting and Social Change, 80(1), 50-76. http://doi.org/10.1016/j.techfore.2012.07.007 open in new tab
  29. Lechman, E. (2015). ICT diffusion in developing countries. Towards a new concept of technological takeoff. Switzerland: Springer International Publishing. http://doi.org/10.1007/978-3-319-18254-4 open in new tab
  30. Leite, P., & Cortez, M. C. (2018). The performance of European SRI funds investing in bonds and their comparison to conventional funds. Investment Analysts Journal, 47(1), 65-79. http://doi.org/10.1080/10293523.2017.1414911 open in new tab
  31. Lettau, M., & Madhavan, A. (2018). Exchange-traded funds 101 for economists. Journal of Economic Perspectives, 32(1), 135-154. http://doi.org/10.1257/jep.32.1.135 open in new tab
  32. Levitt, A. (2017). Five sustainable investing trends in 2017. Retrieved from http://etfdb.com/etf-education/5-sustainable-investing-trends-2017/
  33. Mansfield, E. (1961). Technical change and the rate of imitation. Econometrica: Journal of the Econometric Society, 29(4), 741-766. http://doi.org/10.2307/1911817 open in new tab
  34. Margolis, J. D., & Walsh, J. P. (2003). Misery loves companies: Rethinking social initiatives by business. Administrative Science Quarterly, 48(2), 268-305. http://doi.org/10.2307/3556659 open in new tab
  35. Marszk, A., & Lechman, E. (2018). New technologies and diffusion of innovative financial products: Evidence on exchange-traded funds in selected emerging and developed economies. Journal of Macroeconomics, in press. http://doi.org/10.1016/j.jmacro.2018.10.001 open in new tab
  36. Meyer, P. (1994). Bi-logistic growth. Technological Forecasting and Social Change, 47(1), 89-102. http://doi.org/10.1016/0040-1625(94)90042-6 open in new tab
  37. Meyer, P. S., Yung, J. W., & Ausubel, J. H. (1999). A primer on logistic growth and substitution: The mathematics of the Loglet Lab software. Technological Forecasting and Social Change, 61(3), 247-271. http://doi.org/10.1016/S0040- 1625(99)00021-9 open in new tab
  38. Meziani, A. S. (2016). Exchange-traded funds. Investment practices and tactical approaches. London: Palgrave Macmillan. http://doi.org/10.1057/978-1-137- 39095-0 open in new tab
  39. Moon, J. (2007). The contribution of corporate social responsibility to sustainable development. Sustainable Development, 15(5), 296-306. open in new tab
  40. http://doi.org/10.1002/sd.346 open in new tab
  41. Narula, K. (2012). 'Sustainable Investing' via the FDI route for sustainable development. Procedia-Social and Behavioral Sciences, 37, 15-30. http://doi.org/10.1016/j.sbspro.2012.03.271 open in new tab
  42. Nofsiger, J. R., Sulaeman, J., & Varma, A. (2016). Institutional investors' socially responsible investments: It Just makes (economic) sense. Retrieved from http://www.fmaconferences.org/Vegas/Papers/InstiutionalInvestorsSRI.pdf
  43. Paetzold, F., & Busch, T. (2014). Unleashing the powerful few: Sustainable investing behaviour of wealthy private investors. Organization & Environment, 27(4), 347- 367. http://doi.org/10.1177/1086026614555991 open in new tab
  44. Paetzold, F., Busch, T., & Chesney, M. (2015). More than money: Exploring the role of investment advisors for sustainable investing. Annals in Social Responsibility, 1(1), 195-223. http://doi.org/10.1108/ASR-12-2014-0002 open in new tab
  45. Przychodzen, J., Gómez-Bezares, F., Przychodzen, W., & Larreina, M. (2016). ESG issues among fund managers -factors and motives. Sustainability, 8(1078). http://doi.org/10.3390/su8101078 open in new tab
  46. Revelli, C., & Viviani, J. L. (2015). Financial performance of socially responsible investing (SRI): What have we learned? A meta-analysis. Business Ethics: A European Review, 24(2), 158-185. http://doi.org/10.1111/beer.12076 open in new tab
  47. Sahut, J. M., & Pasquini-Descomps, H. (2015). ESG impact on market performance of firms: International Evidence. Management International/International Management/Gestiòn Internacional, 19(2), 40-63. open in new tab
  48. http://doi.org/10.7202/1030386ar open in new tab
  49. Satoh, D. (2001). A discrete bass model and its parameter estimation. Journal of the Operations Research Society of Japan, 44(1), 1-18. open in new tab
  50. http://doi.org/10.15807/jorsj.44.1 open in new tab
  51. Schmitz, A. (2017). Why ETFs don't work for sustainable investors. Retrieved from https://seekingalpha.com/article/4112075-etfs-work-sustainable-investors
  52. Schoenmaker, D. (2018). Sustainable investing: How to do it. Bruegel Policy Contribution, 2, 1-12. Retrieved from http://bruegel.org/wp- content/uploads/2018/11/PC-23_2018.pdf open in new tab
  53. Swiss Sustainable Finance (2017). Handbook on sustainable investment. Background information and practical examples for institutional asset owners. Zurich: Swiss Sustainable Finance & CFA Society Switzerland. Retrieved from http://www.sustainablefinance.ch/upload/cms/user/201712_Handbook_on_Sustaina ble_Investments_CFA.pdf open in new tab
  54. Trudel, R. (2019). Sustainable consumer behavior. Consumer Psychology Review, 2(1), 85-96. http://doi.org/10.1002/arcp.1045 open in new tab
  55. Utz., S., & Wimmer, M. (2014). Are they any good at all? A financial and ethical analysis of socially responsible mutual funds. Journal of Asset Management, 15(1), 72-82. http://doi.org/10.1057/jam.2014.8 open in new tab
  56. Waygood, S. (2008). Civil society and capital markets. In C. Krosinsky & N. Robins (Eds.), Sustainable investing: The art of long-term performance (pp. 177-188). Abingdon-on-Thames: Earthscan. open in new tab
  57. Weber, O. (2014). The financial sector's impact on sustainable development. Journal of Sustainable Finance & Investment, 4(1), 1-8. open in new tab
  58. http://doi.org/10.1080/20430795.2014.887345 open in new tab
  59. Yan, S., Ferraro, F., & Almandoz, J. (2019). The rise of socially responsible investment funds: The paradoxical role of the financial logic. Administrative Science Quarterly, 64(2). http://doi.org/10.1177/0001839218773324 open in new tab
Sources of funding:
Verified by:
Gdańsk University of Technology

seen 252 times

Recommended for you

What drives sustainable investing? Adoption determinants of sustainable investing exchange-traded funds in Europe

2024

Sustainable Investing. Socio-Economic Impacts of Exchange-Traded Funds

2023

Tracing financial innovation diffusion and substitution trajectories. Recent evidence on exchange-traded funds in Japan and South Korea.

2018

Financial markets diffusion patterns. The case of Mexican investment funds

2017
Meta Tags