Article 9 funds illustrated with foto from Pixabay by mabel amber

Article 9 funds: Researchpost #175

Foto from Pixabay by Mabel Amber

Article 9 funds: 7x new research on happiness, greenwashing, green fund flows, climate data, climate pay, private equity and structured products („#“ shows number of SSRN full paper downloads as of May 9th, 2024)

Social and ecological research

Be happy! How Can People Become Happier? A Systematic Review of Preregistered Experiments by Dunigan Folk and Elizabeth Dunn as of Aug. 11th, 2023: “Can happiness be reliably increased? Thousands of studies speak to this question. However, many of them were conducted during a period in which researchers commonly “p-hacked,” creating uncertainty about how many discoveries might be false positives. To prevent p-hacking, happiness researchers increasingly preregister their studies, committing to analysis plans before analyzing data. We conducted a systematic literature search to identify preregistered experiments testing strategies for increasing happiness. We found surprisingly little support for many widely recommended strategies (e.g., performing random acts of kindness). However, our review suggests that other strategies—such as being more sociable—may reliably promote happiness. We also found strong evidence that governments and organizations can improve happiness by providing underprivileged individuals with financial support” (abstract). My comment: It would be great to have pre-registration for factor and other “outperformance” or alpha-research in financial services (I first discovered this research in a blog post by Joachim Klement).

ESG and impact investment research (Article 9 funds)

Green Article 9 funds: Greenwashing and the EU’s Sustainable Finance Disclosure Regulation by Daniel Fricke Kathi Schlepper as of May 7th, 2024 (#12): “We propose a simple approach to identify potential greenwashers in the context of mutual funds. Focusing on a sample of actively-managed bond funds in Europe, we find that the greenwashing-risk has decreased around the introduction of the EU’s Sustainable Finance Disclosure Regulation (SFDR). For Article 9 funds, the greenwashing-potential has dropped by a factor of two between March 2022 and September 2023. This is both due to (i) re-classifications towards Article 8 products and (ii) sustainability rating improvements. For Article 8 funds, the improvement is less pronounced and the greenwashing-potential remains elevated“ (abstract).

Article 9 funds: Shades of Green: The Effect of SFDR Downgrades on Fund Flows and Sustainability Risk by Hirofumi Nishi, S. Drew Peabody, Eli Sherrill, and Kate Upton as of May 2nd, 2024 (#24): “… our research provides compelling evidence of the significant impact that the European Union’s Sustainable Finance Disclosures Regulation (SFDR) has had on the European ESG fund market, particularly in the context of funds downgraded from Article 9 to Article 8. We documented a discernible decline in net flows into funds following a downgrade …. Moreover, our analysis reveals a tendency for downgraded funds to actively “de-green,” by adjusting their portfolios towards investments with lower ESG scores post-downgrade” (p. 13). My comment: Maybe I can finally expect some inflows in my article 9 fund (which has been performing nicely in the last months), see My fund – Responsible Investment Research Blog ( and FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T

Better climate data: Climate disclosure in financial statements by Maximilian A. Müller, Gaizka Ormazabal, Thorsten Sellhorn, and  Victor Wagner as of March 18th, 2024 (#362): “… we show that large EU-listed firms have substantially increased climate-related disclosures in their financial statements since 2018. …Climate disclosures in financial statements differ from those made elsewhere. The most striking difference is that climate disclosures outside the financial statements are significantly less related to a firm’s climate exposure. Hence, climate disclosures inside financial statements complement the disclosures made elsewhere by filtering out financially immaterial information. Many firms address climate-related matters outside the financial statements – but only those with financially material exposure do so inside their (mandatory and audited) financial statements“ (p. 28/29). My comment: Maybe additional ESG auditing fees deliver value for money.

Climate pay: 2024 Pay for Climate Performance Report by Tina Mavkari, Abigail Paris, Olivia Aldinger, Melissa Walton and Danielle Fugere from As you Sow as of  April 15th, 2024: “This second edition of the Pay for Climate Performance report analyzes how effectively 100 of the largest U.S. companies by market capitalization, across 11 sectors of the economy, are currently linking GHG emissions reduction incentives to CEO remuneration. … For CEOs to be motivated to achieve company-wide, science-aligned climate goals, rewards for climate-related achievements must be measurable, clear, and significant. Too often, where climate-related linkages exist, they are predominantly qualitative, leaving significant and unwarranted discretion to compensation committees; or are non-transparent or overly complex quantitative climate metrics, which are difficult to understand and monitor; or include insignificant metrics not captured in the long-term incentive plan (LTIP), which is the substantial part of CEO pay“ (p. 5). … “Of the 66 companies that do include a climate metric in their CEO compensation, only 20 companies had a measurable climate incentive, which is key to driving outcomes“ (p. 7). My comment: Many shareholder voting and engagement efforts focus on green CEO pay. In my opinion, it is important to avoid simple pay increases (see Pay Gap, ESG-Boni und Engagement: Radikale Änderungen erforderlich – Responsible Investment Research Blog ( and this research shows that the pay details matter very much

Other investment research

Private equity nyths: Does the Case for Private Equity Still Hold? by Nori Gerardo Lietz and Philipp Chvanov as of April 25th, 2024 (#498): “All the actions PE firms claim add value to portfolio companies should result in superior returns relative to PMEs (Sö: Public Market Equivalents). The data indicate the average or median PE funds do not actually outperform their PMEs since the GFC (Sö: Global Financial Crisis). … First, General Partner (“GP”) fund performance persistence has eroded materially. Past performance is not necessarily indicative of future performance. While the top quartile GPs outperform relative to PMEs over time, they are not necessarily the same GPs over time. … if there is little persistence among the top quartile firms, then the selection of any GP is potentially a “random walk”. If that is the case, then investors should expect to achieve at best only average or median PE results. … there has been a somewhat shocking concentration of capital flows among a small number of firms. … PE performance may actually underperform PMEs on a risk adjusted basis given the amount of leverage they employ generating equivalent results on a nominal basis“ (p. 4/5). My comment: See my private investment criticism here: Impact divestment: Illiquidity hurts – Responsible Investment Research Blog (

Bad structures: Do Structured Products improve Portfolio Performance? A Backtesting Exercise by Florian Perusset and Michael Rockinger as of April 29th, 2024 (#164): “This paper shows that the inclusion of structured products in a typical stocks and bonds portfolio, as might be held by an institutional investor, is detrimental for investors, even when considering simple structured products, which are simpler than the majority of the products on the market, even when products are priced at their fair value. This finding implies that when considering more complex structured products sold at a premium, the cost is expected to be higher since more complex products tend to be more overpriced…. “ (p. 22).


Werbehinweis (Article 9 funds)

Unterstützen Sie meinen Researchblog, indem Sie in meinen globalen Small-Cap-Anlagefonds (SFDR Art. 9) investieren und/oder ihn empfehlen. Der Fonds konzentriert sich auf die Ziele für nachhaltige Entwicklung (SDG) und verwendet separate E-, S- und G-Best-in-Universe-Mindestratings sowie ein breites Aktionärsengagement bei derzeit 29 von 30 Unternehmen: FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T und My fund – Responsible Investment Research Blog (