Preferences for Sustainable and Responsible Funds : a choice experiment with Swedish private investors

Abstract: This study addresses the issue of sustainable and responsible investment (SRI) funds and private investors’ trade-offs between fund attributes. Few previous studies have examined preferences of private investors to see which attributes that are most preferable for SRI funds. The purpose of this study was therefore to, in an exploratory manner, examine which preferences private investors have for fund attributes and what type of sustainability strategy and aspect that affect the fund choice. Moreover, an investigation of the importance that private investors place on screening criteria was made. The data was collected from private investors in Sweden by distributing a questionnaire. The trade-offs were determined by conducting a discrete choice experiment. The results indicate that private investors prefer sustainable funds, with lower risk, low management fees and a higher return. Furthermore, the most preferred sustainability strategy is sustainability themed followed by negative screening whilst engagement and voting is the least preferred strategy. Additionally, environment is the preferred sustainability aspect over governance. The present study adds to the existing body of research by eliciting the different trade-offs that private investors make between fund attributes. Thus, a greater understanding of private investors preferences can emerge, and the communication can be tailored accordingly. Furthermore, this study contributes by improving the understanding of the importance of screening criteria in relation to SRI funds.