ESG Consciousness in Mutual Fund Advisory: Examining Attitudes, Intentions, and Moderating role of Fund Fundamentals and Herding Bias

Abstract

Abstract This study explores the relationship between mutual fund advisors' ESG consciousness, their attitude towards ESG funds, and their intention to advise ESG funds, while also considering the moderating influence of fund fundamentals and herding bias. Data was collected from 234 Indian financial advisors in the mutual fund domain using a Likert scale questionnaire. Amos based Structural Equation Modeling (SEM) was employed for data analysis. The results indicate a significant connection wherein advisors with heightened ESG consciousness tend to hold more positive attitudes toward ESG funds, which, in turn, positively predict their intention to provide advisory services related to ESG funds. Furthermore, fund fundamentals, encompassing financial and non-financial attributes of ESG funds, play a crucial moderating role, particularly when advisors perceive these fundamentals as robust and positive. Notably, herding bias among advisors also positively moderates the relationship, indicating that advisors with a greater inclination to follow industry trends and peer behavior are more influenced by their positive attitudes, resulting in a stronger intention to recommend ESG funds. These findings have implications for investors and advisors alike, shedding light on the dynamics of ESG-conscious investing in emerging markets and its potential impact on financial decisions.