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.
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.
- Carbon transitions
- Robo advisors
- Technological Investments