The Effect of Socially Responsible Investing on Mutual Fund Performance

2012 ◽  
Author(s):  
Rima Tamošiūnienė ◽  
Indrė Slapikaitė
Keyword(s):  
Mutual Fund ◽  
Fund Performance ◽  
Socially Responsible Investing ◽  
Mutual Fund Performance ◽  
Socially Responsible ◽  
Responsible Investing

Impact of ESG Rating of Companies on the Portfolio Performance

2021 ◽  
Vol 8 (4) ◽  
pp. 34-42
Author(s):  
Ramkumar Samyukth
Keyword(s):  
Fund Performance ◽  
Minimum Variance ◽  
Socially Responsible Investing ◽  
Sharpe Ratio ◽  
Portfolio Performance ◽  
Socially Responsible ◽  
Responsible Investing ◽  
Service Companies ◽  
Minimum Variance Portfolio ◽  
Mean Variance Portfolio

Socially responsible investing is becoming more popular among people because people are becoming more concerned about the environment and society. Socially responsible investors screen the company by considering the ESG factors. The question raced is whether socially responsible investing improves the portfolio performance and how the funds perform during uncertain times like the Covid-19 pandemic. Since many critics of ESG funds say that the ESG funds’ performance highly depends on Software and Service company stocks, so the relevance of Software and Service companies in the fund has been analyzed in this research. The portfolios have been formed by using the Markowitz mean-variance portfolio model, and the performance of the minimum variance portfolio has been studied. The fund performance has been analyzed using the Sharpe ratio, and the result concludes that the ESG fund performance with minimum variance has an abnormally high Sharpe Ratio of 10.8. A similar type of performance was identified during the Covid-19 pandemic. The abnormally high Sharpe ratio will encourage investors to move towards socially responsible investing.

Do “Good Guys” Finish Last? The Relationship between Morningstar Sustainability Ratings and Mutual Fund Performance

2019 ◽  
Keyword(s):  
Mutual Fund ◽  
Cash Flows ◽  
Fund Performance ◽  
Financial Benefit ◽  
Socially Responsible ◽  
Ongoing Debate ◽  
Strict Adherence ◽  
Responsible Investing ◽  
Investor Returns ◽  
The Relationship

Given the rapid growth of investment products focused on socially responsible investing (SRI), in March 2016, Morningstar began reporting standardized metrics to “grade” the sustainability (i.e., SRI) level of thousands of mutual funds. By analyzing this new metric, the authors aim to help clarify the ongoing debate surrounding whether SRI positively or negatively affects investor returns. They find that funds with high sustainability scores have about the same risk-adjusted returns (i.e., alphas) as other funds. Thus, SRI investors can apparently follow a social mandate without sacrificing financial performance, but also without garnering any incremental financial benefit as well. They find, however, that the vast majority of high sustainability funds are concentrated in the large-cap space, which implies that strict adherence to social criteria could inadvertently result in less diversified investor portfolios. They also find that funds with high Morningstar sustainability scores generally mimic those of self-proclaimed SRI funds, suggesting that the new metric opens up a larger pool of potential funds for investors focused on SRI. Lastly, they find that funds that specifically designate and market a social mandate experience more stable cash flows; therefore, the self-proclaimed mandate may be more beneficial for the fund company than it is for investors.

Does socially responsible mutual fund performance vary over the business cycle? New insights on the effect of idiosyncratic SR features

2018 ◽  
Vol 28 (1) ◽  
pp. 71-98 ◽  
Author(s):  
Juan Carlos Matallín-Sáez ◽  
Amparo Soler-Domínguez ◽  
Diego Víctor de Mingo-López ◽  
Emili Tortosa-Ausina
Keyword(s):  
Business Cycle ◽  
Mutual Fund ◽  
Fund Performance ◽  
Mutual Fund Performance ◽  
Socially Responsible ◽  
The Business Cycle

scholarly journals Fund Ratings of Socially Responsible Investing (SRI) Funds: A Precautionary Note

2021 ◽  
Vol 13 (14) ◽  
pp. 7548
Author(s):  
Pornanong Budsaratragoon ◽  
Boonlert Jitmaneeroj
Keyword(s):  
Mutual Fund ◽  
Structural Equation ◽  
Socially Responsible Investing ◽  
Equation Modeling ◽  
Causal Relationships ◽  
Socially Responsible ◽  
Rating Agencies ◽  
Fund Managers ◽  
Responsible Investing ◽  
The U.S

We examine fund ratings of socially responsible investing (SRI) equity funds in emerging and developed markets by validating the assumptions of the equally weighted U.S. News mutual fund scorecard and the causal interrelations among its rating agencies—Morningstar, Lipper, Zacks, CFRA and TheStreet—for improvement priorities. In so doing, we apply a novel interdisciplinary methodology including cluster analysis, classification analysis, partial least squares structural equation modeling and importance performance analysis. We find evidence against the U.S. News assumptions, as individual rating agencies have unequal effects and exhibit the causal relationships among one another. We suggest emerging (developed) market fund managers allocate their resources—which are often limited—with the first priority to improving fund ratings of CFRA (Zacks), followed by Zacks (CFRA), TheStreet (Lipper), Lipper (Morningstar) and Morningstar (TheStreet). The positive causal relationships among rating agencies indicates that investors consider multiple rating agencies of the U.S. News for investment decisions, rather than simply use any single one of these rating agencies or their equally weighted aggregation. Interestingly, we find disagreement among rating agencies, with Zack (TheStreet) displaying rating deflation for emerging (developed) market funds. Disagreement among rating agencies may increase the monitoring effort of fund managers who usually “shop” for additional ratings in the hope of maximizing their average ratings.

Understanding Socially Responsible Investing and Its Implications for Islamic Investment Industry

2019 ◽  
Vol 7 (1) ◽  
pp. 1
Author(s):  
Mohd Nizam Barom
Keyword(s):  
Investment Decision ◽  
Socially Responsible Investing ◽  
Clear Understanding ◽  
Socially Responsible ◽  
Responsible Investment ◽  
Developed Economies ◽  
Responsible Investing ◽  
Screening Strategies ◽  
Investment Process ◽  
Islamic Investment

Understanding Socially Responsible Investing and Its Implications for Islamic Investment Industry // // // // // Social, ethical and environmental concerns have been used as important consideration for investment decision by an increasing number of investors. This can be seen by the size and growth of the socially responsible investment (SRI) industry in the developed economies. At the same time, scholars and commentators of Islamic finance have also called for Islamic investment industry to learn from the experience of SRI in incorporating social responsibility issues in the investment process, in line with the ethical principles of Islam and the overall objective of the Shari’ah (Maqasid al-Shari’ah). This would require Islamic investment sector to have a clear understanding of the SRI industry in order to effectively benefit from its experience. This is particularly critical due to the significant diversity of investors and complexity in the issues and strategies adopted in the SRI industry. Hence, this paper adds to the Islamic investment literature by providing an extensive  and systematic survey of SRI industry in terms of its (i) underlying motivations and values; (ii) issues of concerns; (iii) types of investors; and (iv) screening strategies. It then synthesizes these components within the context of the ‘value-based’ investors. This synthesized framework offers a useful tool for Islamic investment practitioners to understand the theoretical and practical aspects of SRI. Subsequently, the paper highlights important implications of the findings for Islamic investment industry in terms of the issues that it needs to consider in emulating SRI practices and a number of lessons that it can learn from the SRI experience.  

Explaining Persistence in Mutual Fund Performance

CFA Digest ◽  
1999 ◽  
Vol 29 (2) ◽  
pp. 79-81
Author(s):  
Bruce D. Phelps
Keyword(s):  
Mutual Fund ◽  
Fund Performance ◽  
Mutual Fund Performance
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