E&M

As ESG considerations have become increasingly central to investment strategies, sustainability-oriented investing has attracted growing attention. This paper examines whether closed-end equity funds classified under SFDR Articles 8 and 9 exhibit different financial performance from conventional Article 6 funds. Using a cross-sectional regression on 56 closed-end equity funds, the analysis controls for volatility, fund size, and geographic exposure. The findings show that SFDR classification is significantly associated with returns: Article 8 and Article 9 funds underperform their Article 6 counterparts over a three-year horizon. Volatility is negatively associated with performance, while fund size and geographic exposure are not statistically significant. The paper suggests that this underperformance may reflect short-term market conditions and that sustainability-related benefits may materialize over longer horizons.