PT  - JOURNAL ARTICLE
AU  - C. Edward Chang
AU  - Thomas M. Krueger
AU  - H. Doug Witte
TI  - Analyst Ratings and MOAT Ratings Sensitivities to ESG Risk and Fund Charges
AID  - 10.3905/jwm.2022.1.176
DP  - 2022 Jul 31
TA  - The Journal of Wealth Management
PG  - 55--70
VI  - 25
IP  - 2
4099  - https://pm-research.com/content/25/2/55.short
4100  - https://pm-research.com/content/25/2/55.full
AB  - Investment risk has many dimensions beyond the macroeconomic, industry, and firm gradients. This article reports on a study of investor response to various levels of corporate exposure to environmental, societal, and governance risk, which is frequently referred to as sustainability. The article also studies the correlation between sustainability and economic moats. Investor response is measured using Morningstar’s Analyst ratings and Quantitative ratings. The extent to which loads and annual expenses impact analyst and MOAT ratings is also explored. We document the surprising negative relationship between mutual fund sustainability and Morningstar’s Analyst ratings and Quantitative ratings. By comparison, there is an anticipated positive relationship between fund Sustainability ratings and Morningstar Economic Moat ratings (MOAT ratings). Although Analyst ratings are swayed by loads and expense ratios, MOAT ratings are insensitive. Fortunately, paying loads and higher expense ratios does not result in higher MOAT ratings.