Reboredo Nogueira, Juan CarlosOtero González, Luis2022-08-112022-08-112021Business Strategy and the Environment, 31(3), 950–968. https://doi.org/10.1002/bse.2928http://hdl.handle.net/10347/29056Transitioning to a low-carbon economy to mitigate the effects of climate change involves risks. We investigate the effects of managerial ownership and management on the low carbon transition risk of mutual fund portfolios and the effects of low carbon transition risk on mutual fund performance and flows. Using low carbon transition risk ratings based on the unmanaged carbon risk of the companies included in fund portfolios, we find that managerial ownership and the socially responsible focus of the fund reduce fund portfolio exposure to carbon risk, whereas active management has the opposite effect. Furthermore, we find that funds with low carbon transition risk produce a better risk-adjusted performance are more sensitive to tail risks and exhibit a better fund flow performanceengThis is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited. © 2021 The Authors. Business Strategy and The Environment published by ERP Environment and John Wiley & Sons Ltd.http://creativecommons.org/licenses/by/4.0/Carbon transition riskManager ownershipMutual fund flowsMutual fund performanceMutual fundsSocially responsible investmentjournal article10.1002/bse.29281099-0836open access