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Investigating ESG Funds in China: Management Fees and Investment Performance

Author

Listed:
  • Michael C. S. Wong

    (Department of Economics and Finance, City University of Hong Kong, Hong Kong)

  • Wei Li

    (Department of Economics and Finance, City University of Hong Kong, Hong Kong)

Abstract

This study investigates the association among management fees, ESG scores, and investment performance of ESG funds in China. It explores the significance of comprehending the cost–benefit analysis and long-term yields associated with sustainable investing. The investigation specifically concentrates on China’s open-end equity funds and uncovers some noteworthy discoveries. Initially, funds with higher management fees tend to yield greater returns, suggesting a potential validation for these fees. Nevertheless, when taking risk-adjusted metrics into account, these funds do not exhibit superior performance, indicating that the elevated fees may not necessarily result in enhanced performance after factoring in risk. Furthermore, the analysis discloses an adverse influence of ESG factors on fund performance. In general, the findings indicate that ESG funds in China do not impose higher management fees and do not ensure better returns but often produce superior risk-adjusted investment performance if their ESG scores are moderately higher. Exceptionally high ESG scores can end up with the worst risk-adjusted investment performance.

Suggested Citation

  • Michael C. S. Wong & Wei Li, 2024. "Investigating ESG Funds in China: Management Fees and Investment Performance," IJFS, MDPI, vol. 12(2), pages 1-21, April.
    • Handle: RePEc:gam:jijfss:v:12:y:2024:i:2:p:38-:d:1382769
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    References listed on IDEAS

    as
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    5. Latzko, David A, 1999. "Economies of Scale in Mutual Fund Administration," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 22(3), pages 331-339, Fall.
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