https://door.donau-uni.ac.at/o:5743 Balancing values and value: ESG (environmental, social and governance) and performance trade-offs in multi-asset funds Opey, Abednego Brandy Abednego Brandy Opey Matysek, Anna Anna Matysek 0000-0003-1839-7096 Poznań University of Economics and Business Bauer, Eva-Maria Eva-Maria Bauer 0009-0007-2123-8324 Universität für Weiterbildung Krems text eng This study explores the connection between environmental, social, and governance (ESG) classifications and the financial performance of European multi-asset funds. It utilises the Sustainable Finance Disclosure Regulation (SFDR) framework to categorise these funds effectively. Adopting a dual-leg analytical framework, the research evaluates both structural ESG integration under SFDR Articles 6, 8, and 9, as well as corresponding fund performance across risk-adjusted metrics. Data were drawn from 269 funds domiciled in the European Union, with classification and performance indicators sourced from Refinitiv and verified through regulatory disclosures. Quantitative analysis employed Modern Portfolio Theory (MPT) to assess return, volatility, Sharpe, Sortino, and Treynor ratios, while stakeholder theory informed the interpretation of ESG classification as both a regulatory and reputational signal. The findings reveal that Article 6 funds consistently delivered the highest average returns over five- and ten-year horizons, followed by Article 8 funds. Article 9 funds showed the lowest returns. In terms of risk-adjusted metrics, Article 6 and 8 funds achieved positive Sharpe ratios over longer periods, while Article 9 funds underperformed and exhibited higher volatility. Also, emissions data showed significant overlap across SFDR categories, with some Article 6 funds outperforming Article 8 and 9 funds in emissions metrics, raising concerns about classification consistency. The study concludes that higher ESG ambition (Article 9) does not guarantee superior financial performance or lower risk, suggesting a potential trade-off between sustainability goals and returns. These results hold a significant impact on fund managers, institutional investors, and policymakers engaged in sustainable finance. ESG integration Sustainable Finance Disclosure Regulation (SFDR) multi-asset funds risk-adjusted performance stakeholder theory sustainable investing http://rightsstatements.org/vocab/InC/1.0/ https://door.donau-uni.ac.at/api/object/o:5743/download https://door.donau-uni.ac.at/o:5751 application/pdf 1.93 MB 2025