Can robo advisors expedite carbon transitions?: Evidence from automated funds

Shan Shan; Muhammad Umar; Nawazish Mirza

doi:10.1016/j.techfore.2022.121694

Can robo advisors expedite carbon transitions? Evidence from automated funds

Shan Shan, Muhammad Umar, Nawazish Mirza

School of Strategy and Leadership

Research output: Contribution to journal › Article › peer-review

11 Citations (Scopus)

88 Downloads (Pure)

Abstract

When it comes to making comparisons with traditional funds, it has been observed that Robo advisers have emerged as a viable alternative that imposes a substantially lesser load on the investors. As a result, they are capable of playing a crucial role in supporting low-carbon transitions - a phenomenon that has never been investigated prior to this. In this study, we assess the performance of automated funds, after categorizing them into different groups, based on their investment exposure to carbon-emitting enterprises. Our findings reveal that automated funds that invest in low-carbon funds tend to outperform their competitors. Moreover, when we compare the absolute returns, the return to value at risk, the adjusted Sharpe ratio, and Jensen's alpha, these results remain consistent. In addition to this, we also found that Robo funds with less exposure to polluting companies have better market timing. Therefore, we conclude that these technology-enabled investment vehicles can help with low-carbon transitions and are instrumental in achieving sustainable development goals.

Original language	English
Article number	121694
Number of pages	6
Journal	Technological Forecasting and Social Change
Volume	180
Early online date	3 May 2022
DOIs	https://doi.org/10.1016/j.techfore.2022.121694
Publication status	Published - Jul 2022

Bibliographical note

© 2022, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

Copyright © and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.

Keywords

Carbon transitions
Robo advisors
Technological Investments

Access to Document

10.1016/j.techfore.2022.121694

Post-PrintAccepted author manuscript, 789 KBLicence: CC BY-NC-ND

Cite this

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