One issue that I keep coming back to concerns the conflicts inherent in asset management.  Namely, mutual fund companies control lots of funds; each fund is its own entity, and presumably has its own interests; and yet historically, they’ve tended to be managed as a group, with – for example – all funds voting relatively in tandem, even if different funds might have different sets of interests (not always; sometimes there are legal reasons to separate them).

Anyway, it’s a subject I’ve written about in the past, and I’m always fascinated when a new empirical paper pops up illustrating the coordinated management of funds. Recently there have been a couple of interesting ones on the subject of ESG.  Previously, I blogged about this paper by Roni Michaely, Guillem Ordonez-Calafi, and Silvina Rubio, which finds that mutual fund families let their ESG funds vote separately in support of ESG issues only when those votes are unlikely to be the pivotal ones, because the proposal is widely supported or widely opposed.  When it’s a close vote, their ESG funds are reined in to the house view.

And now there’s ESG Favoritism in Mutual Fund Families, by Anna Zsofia Csiky, Rainer Jankowitsch, Alexander Pasler, & Marti G. Subrahmanyam, which finds that mutual fund families functionally “subsidize” their ESG funds – by allocating better performing assets to them at the expense of other, non-ESG funds within the same family – in order to prevent them from underperforming.  The authors speculate that families may be motivated to support their ESG funds in order to cater to a new ESG market, or simply to burnish their own reputations.

And finally, the latest Shareholder Primacy podcast is up.  This week, me and Mike Levin talk about the McRitchie v. Zuckerberg case, and Exxon’s lawsuit against Arjuna Capital.  Available at Apple, Spotify, and YouTube.