The same logic also naturally applies to ESG funds. If a manager is known to outperform because of their superior use of ESG information then, on average, you can expect their fees to rise to reflect this and to neutralize the benefits to incoming investors to the fund.
I don’t know if this is necessarily true, because often times outperforming firms get inflows of assets. Then they wouldn’t have to raise their fees because they make more money by taking the same (or lower) fees off of a larger pool of assets.
There may be research out there that completely disproves my hypothesis, it is just a hypothesis, but I don’t think one can necessarily make that logical jump.
The same logic also naturally applies to ESG funds. If a manager is known to outperform because of their superior use of ESG information then, on average, you can expect their fees to rise to reflect this and to neutralize the benefits to incoming investors to the fund.
I don’t know if this is necessarily true, because often times outperforming firms get inflows of assets. Then they wouldn’t have to raise their fees because they make more money by taking the same (or lower) fees off of a larger pool of assets.
There may be research out there that completely disproves my hypothesis, it is just a hypothesis, but I don’t think one can necessarily make that logical jump.