Biodiversity Mutual Funds and ETFs: Characteristics, Performance, Risk, and Fees

This paper provides an exploratory analysis of biodiversity-themed funds and offers early evidence on their characteristics, performance, risk, fees, and sustainability metrics. Using a sample of 24 open-end biodiversity funds (18 mutual funds and 6 ETFs), we find that these funds are predominantly European-domiciled equity funds, recently launched, small in size, and generally receive high sustainability ratings. However, both active and passive funds underperform their benchmarks over their short track records and charge higher fees than comparable funds, consistent with the early-stage development of this segment. We also examine fund manager characteristics and find no consistent relationship with performance. Our results highlight the need for greater fee transparency, and clearer communication of sustainability–return trade-offs.