Investing with purpose: ESG and Gender in Swedish mutual funds

Abstract

This thesis investigates actively and passively managed Swedish mutual funds performance from the perspective of sustainability and gender diversity. Despite widespread research around the world, there are limited studies taking these factors into consideration in the Swedish fund market. Using panel regression across 2018-2023 fund-level data, the study examines the association of net asset value (NAV) with aggregated ESG scores and gender diversity in boards and executive positions at the portfolio company level. The findings reveal that gender diversity at the executive level in the funds holdings is positively associated with performance, whereas diversity at the board level in the funds holdings is negatively associated. ESG scores and active or passive management strategy have varying degrees of influence on performance outcomes as well. The management style of the funds show that Active funds can reverse the effect on NAV by gender diversity metrics on the asset level. The conclusions support the application of modern portfolio theory, institutional theory, and behavioral finance, with a focus on the influence of cultural expectations and investor behavior on fund performance. The thesis contributes to ongoing discussion of responsible investment practice through the use of the integration of sustainability, and diversity measures into fund analysis and offers insights for fund managers and investors in the Swedish market.