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Exit vs. Voice

Abbestam, Marcus LU (2023) NEKH02 20231
Department of Economics
Abstract
This thesis examines the relationship between fund performance and the choice of strategy when an invested asset is reclassified to a fund’s exclusion’s list. The two choices of strategy are divesting the asset or using active ownership methodology by communicating with the asset. To examine the performance of the funds, Jensen’s alpha, Sharpe ratio, Information ratio and Treynor ratio is calculated. A total of 31 active Swedish global equity funds is in the analysis with 17 of them using the active ownership strategy and 14 using the divestment strategy. The study resulted in conclusive results that a Divestment First strategy performs better than an Active Ownership First strategy. There could be multiple reasons to why this happens,... (More)
This thesis examines the relationship between fund performance and the choice of strategy when an invested asset is reclassified to a fund’s exclusion’s list. The two choices of strategy are divesting the asset or using active ownership methodology by communicating with the asset. To examine the performance of the funds, Jensen’s alpha, Sharpe ratio, Information ratio and Treynor ratio is calculated. A total of 31 active Swedish global equity funds is in the analysis with 17 of them using the active ownership strategy and 14 using the divestment strategy. The study resulted in conclusive results that a Divestment First strategy performs better than an Active Ownership First strategy. There could be multiple reasons to why this happens, with the most important being the costs of time and capital by investors when trying to influence its assets to become better. A recommendation for all funds to change to a Divestment First strategy is not suggested, since research shows that divestment leads to no or negative progress on a company level. (Less)
Please use this url to cite or link to this publication:
author
Abbestam, Marcus LU
supervisor
organization
course
NEKH02 20231
year
type
M2 - Bachelor Degree
subject
keywords
Sustainability, Active ownership, Divestment, Risk-adjusted performance, Funds
language
English
id
9120748
date added to LUP
2024-01-22 15:43:01
date last changed
2024-01-22 15:43:01
@misc{9120748,
  abstract     = {{This thesis examines the relationship between fund performance and the choice of strategy when an invested asset is reclassified to a fund’s exclusion’s list. The two choices of strategy are divesting the asset or using active ownership methodology by communicating with the asset. To examine the performance of the funds, Jensen’s alpha, Sharpe ratio, Information ratio and Treynor ratio is calculated. A total of 31 active Swedish global equity funds is in the analysis with 17 of them using the active ownership strategy and 14 using the divestment strategy. The study resulted in conclusive results that a Divestment First strategy performs better than an Active Ownership First strategy. There could be multiple reasons to why this happens, with the most important being the costs of time and capital by investors when trying to influence its assets to become better. A recommendation for all funds to change to a Divestment First strategy is not suggested, since research shows that divestment leads to no or negative progress on a company level.}},
  author       = {{Abbestam, Marcus}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Exit vs. Voice}},
  year         = {{2023}},
}