If sustainable fund shops see a slight pickup in sales around the time people are feeling seasonal blues, it might not be a coincidence.
New research from three groups in Australia has found a link between seasonal depression and investing in funds with high ESG ratings. The findings appear to go against conventional thinking about how emotions affect preferences, namely that being in a good mood, with the associated feeling of altruism, would lead an investor to seek out sustainable fund options.
“Our results suggest that when it comes to investing in sustainable equity mutual funds, risk aversion triggered by bad mood is a more likely cause for increased investment than potential happiness related to altruistic behavior,” Audencia professor Alexandre Garel said in an announcement about the study.
“This does not imply that sadness is good for the environment or society, but rather confirms that investors see sustainable investments as a safer option.”
Garel authored the paper, along with Adrian Fernandez-Perez at the Auckland University of Technology and Ivan Indriawan from the University of Adelaide. It was published in August in Economics Letters. The researchers used data on moods of investors in 25 countries and their holdings in sustainable equity mutual funds between 2018 and 2021.
A key finding from the study is that increases in seasonal depression correlate with a 0.07% monthly increase in preferences for sustainable funds, adding up to 0.84% per year.
Seasonal depression in the northern hemisphere begins to be at high point in September, a low in March, the authors noted.
Although lower mood appears to be associated with increased preference for sustainable funds, it’s unclear whether investing in such products has any effect on improving mood in those cases, according to the report.
However, a 2021 paper from researchers at the University of Zurich found that there may be some positive feels associated with sustainable investing. Investors who prefer ESG funds often seek out the investments because they are “warm-glow optimizers who prefer investments that feel good rather than as consequentialists who derive utility from optimizing their impact,” authors of that report noted.
Investors were also willing to pay higher fees for funds with positive environmental impacts, although their preferences did not appear to be affected by the magnitude of impact among different funds.
This story was originally published on ESG Clarity.
Insiders say the Wall Street giant is looking to let clients count certain crypto holdings as collateral or, in some cases, assets in their overall net worth.
The two wealth tech firms are bolstering their leadership as they take differing paths towards growth and improved advisor services.
“We think this happened because of Anderson’s age and that he was possibly leaving,” said the advisor’s attorney.
The newly appointed leader will be responsible for overseeing fiduciary governance, regulatory compliance, and risk management at Cetera's trust services company.
Certain foreign banking agreements could force borrowers to absorb Section 899's potential impact, putting some lending relationships at risk.
How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave
From direct lending to asset-based finance to commercial real estate debt.