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Economic policy uncertainty and active management: Evidence from SRI funds

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  • Ahmed, Neveen
  • Tanos, Barbara Abou
  • Farooq, Omar
  • Bouaddi, Mohammed

Abstract

This study explores the impact of economic policy uncertainty (EPU) on the relationship between active management and the performance of socially responsible mutual funds. Using data on U.S. socially responsible funds, we show that active management is more valuable in periods characterized by high EPU. The findings are robust across different fund characteristics, active management metrics, EPU proxies, and fund performance measures. Our results are further validated using multiple estimation techniques. Additionally, funds that are younger, smaller, with higher expenses, lower turnover, and slower growth are more likely to benefit from active management as economic policy uncertainty increases.

Suggested Citation

  • Ahmed, Neveen & Tanos, Barbara Abou & Farooq, Omar & Bouaddi, Mohammed, 2025. "Economic policy uncertainty and active management: Evidence from SRI funds," Finance Research Letters, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:finlet:v:79:y:2025:i:c:s1544612325006026
    DOI: 10.1016/j.frl.2025.107339
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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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