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Preferences for sustainable and responsible equity funds - A choice experiment with Swedish private investors

Author

Listed:
  • Lagerkvist, C.J.
  • Edenbrandt, A.K.
  • Tibbelin, I.
  • Wahlstedt, Y.
Abstract
We perform a choice experiment modeled on equity fund savings, to estimate preferences for sustainable and responsible investments and conventional fund attributes among private investors in Sweden (n = 559). We find that sustainability strategies, as well as an environmental focus, were more important than other fund characteristics. Moreover, negative affect in relation to SRI contributed as an observable factor to explain variance heterogeneity while experience in fund savings, positive product involvement as well as positive affect were not significant. Our main finding is, however, that latent behavioral characteristics of the investors are strong predictors of latent class membership thereby contributing to distinguish nontrivial investor sub-groups. We find no support for the contribution of sociodemographic characteristics. These results can serve to identify market segments so that equity fund offerings, including those related to SRI, can be mobilized, optimized and tailored to meet the demand for SRI among private investors.

Suggested Citation

  • Lagerkvist, C.J. & Edenbrandt, A.K. & Tibbelin, I. & Wahlstedt, Y., 2020. "Preferences for sustainable and responsible equity funds - A choice experiment with Swedish private investors," Journal of Behavioral and Experimental Finance, Elsevier, vol. 28(C).
    • Handle: RePEc:eee:beexfi:v:28:y:2020:i:c:s2214635020303336
    DOI: 10.1016/j.jbef.2020.100406
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    Cited by:

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    2. Shome, Samik & Hassan, M. Kabir & Verma, Sushma & Panigrahi, Tushar Ranjan, 2023. "Impact investment for sustainable development: A bibliometric analysis," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 770-800.
    3. Donatella Baiardi & Maria Gaia Soana, 2021. "Macroeconomic and microeconomic environmental and energy policies: are they effective for improving the environmental performance of listed companies?," Working Papers 478, University of Milano-Bicocca, Department of Economics, revised Aug 2021.
    4. Théophile Anquetin & Guillaume Coqueret & Bertrand Tavin & Lou Welgryn, 2022. "Scopes of carbon emissions and their impact on green portfolios," Post-Print hal-04144612, HAL.
    5. Buchanan, Bonnie & Silvola, Hanna & Vähämaa, Emilia, 2023. "Sustainability and private investors," Bank of Finland Research Discussion Papers 14/2023, Bank of Finland.
    6. Brunen, Ann-Christine & Laubach, Oliver, 2022. "Do sustainable consumers prefer socially responsible investments? A study among the users of robo advisors," Journal of Banking & Finance, Elsevier, vol. 136(C).
    7. Ali Raza Elahi & Anum Iqbal & Bilal Ahmad Minhas & Fouzia Ashfaq, 2023. "The Behavior Risk Biases And Sustainable Investment Decision," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 12(3), pages 74-88.
    8. Carlos Díaz-Caro & Eva Crespo-Cebada & Borja Encinas Goenechea & Ángel-Sabino Mirón Sanguino, 2023. "Trinomial: Return-Risk and Sustainability: Is Sustainability Valued by Investors? A Choice Experiment for Spanish Investors Applied to SDG 12," Risks, MDPI, vol. 11(8), pages 1-12, August.
    9. Löfgren, Åsa & Nordblom, Katarina, 2024. "Reconciling sustainability preferences and behavior — The case of mutual fund investments," Journal of Behavioral and Experimental Finance, Elsevier, vol. 41(C).
    10. Meunier, L. & Ohadi, S., 2023. "Exclusion strategy in socially responsible investment: One size does not fit all," Journal of Behavioral and Experimental Finance, Elsevier, vol. 39(C).
    11. Anquetin, Théophile & Coqueret, Guillaume & Tavin, Bertrand & Welgryn, Lou, 2022. "Scopes of carbon emissions and their impact on green portfolios," Economic Modelling, Elsevier, vol. 115(C).
    12. Nadine Gatzert & Anna Kraus, 2024. "Do sustainability attributes play a role for individuals’ decisions regarding unit-linked life insurance? A survey research on German private investors," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 49(4), pages 719-746, October.
    13. Lucía de Carlos Fraile & Eva Crespo-Cebada & à ngel Sabino Mirón-Sanguino & Carlos Díaz-Caro, 2023. "Heterogeneity in investment behavior in sustainable products: the case of thematic funds," Economics and Business Letters, Oviedo University Press, vol. 12(2), pages 115-120.
    14. Staněk Gyönyör, Lucie & Horváth, Matúš, 2024. "Does ESG affect stock market dependence? An empirical exploration of S&P 1200 companies shows the divergent nature of E–S–G pillars," Research in International Business and Finance, Elsevier, vol. 69(C).
    15. Löfgren, Åsa & Nordblom, Katarina, 2022. "Sustainability preferences and financial decision-making among mutual fund investors," Working Papers in Economics 826, University of Gothenburg, Department of Economics.
    16. Donatella Baiardi & Maria Gaia Soana, 2021. "Macroeconomic and microeconomic environmental and energy policies: are they effective for improving environmental performance of listed companies?," Working Paper series 21-17, Rimini Centre for Economic Analysis.
    17. Seifert, Marcel & Spitzer, Florian & Haeckl, Simone & Gaudeul, Alexia & Kirchler, Erich & Palan, Stefan & Gangl, Katharina, 2024. "Can information provision and preference elicitation promote ESG investments? Evidence from a large, incentivized online experiment," Journal of Banking & Finance, Elsevier, vol. 161(C).
    18. David Aristei & Manuela Gallo, 2021. "Financial Knowledge, Confidence, and Sustainable Financial Behavior," Sustainability, MDPI, vol. 13(19), pages 1-21, September.
    19. Gutsche, Gunnar & Nakai, Miwa & Arimura, Toshi H., 2021. "Revisiting the determinants of individual sustainable investment—The case of Japan," Journal of Behavioral and Experimental Finance, Elsevier, vol. 30(C).

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    More about this item

    Keywords

    Latent class modeling; Impact investment; Variance heterogeneity; Segmentation;
    All these keywords.

    JEL classification:

    • C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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