A comparative evaluation of the performance of European green and conventional stock funds across varying market conditions

Abstract Stock funds are key products in the financial market, driven by investor preferences. Over the past decade, this list has expanded, mainly due to the rise of green (sustainable) stock funds, which offer conscious investing options for investors who consider environmental, societal, and financial factors. This study investigates the performance of selected conventional and green stock funds as market indicators from Q3 2014 to Q2 2024. It also analyzes relative (Q3 2014-based) price change trends over the period, how these reflect major market events, and the relationships between overall price movements and resistance levels in the two groups. Furthermore, the study compares fund performance during pre-, during-, and post-COVID-19 periods. To better understand their reflection of market conditions, green stock funds are also compared with two ESG indices. Results based on relative price dynamics show significant fluctuations across categories and periods, with global crises triggering notable changes. Notably, green stock funds buffered setbacks better than conventional funds, particularly from Q1 2021 onward, leading to substantial differences over time. They also exhibit strong correlation with the S&P 500 Global ESG Index and the MSCI Europe ESG Leaders Index, indicating representativeness. Overall, the findings support the importance of green stock fund performance, aligning with stakeholder theory and regulatory and market shift theory, and are relevant to investors and policymakers.