Target date fund

Incentive

Investment fund

Ecology

Biology

Microeconomics

Sovereign wealth fund

Manager of managers fund

Economics

Market economy

Open-end fund

Market liquidity

Business

Corporate governance

Fund administration

Climate change

Climate risk

Investment management

Political science

Institutional investor

Finance

Equity (law)

Mutual fund

Climate Finance

Ecological Economics

Using information on climate transition risks embedded in US equity mutual fund portfolios, we report evidence that mutual fund investors consider climate-related transition risk to be an undesirable fund feature and accordingly allocate more money to funds with lower climate-related transition risk. The size of the impact of this risk on fund flows differs depending on the performance expectations of investors and the socially responsible focus and sustainability of the fund. Our results suggest that mutual fund investors are aware of climate-related transition risks as evidenced by their investment decisions.

Are investors aware of climate-related transition risks? Evidence from mutual fund flows