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The Performance of Socially Responsible Mutual Funds: The Role of Fees and Management Companies

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  • Javier Gil-Bazo
  • Pablo Ruiz-Verdú
  • André Santos

Abstract

In this paper, we shed light on the debate about the financial performance of socially responsible investment (SRI) mutual funds by separately analyzing the contributions of before-fee performance and fees to SRI funds' performance and by investigating the role played by fund management companies in the determination of those variables. We apply the matching estimator methodology to obtain our results and find that in the period 1997-2005, US SRI funds had significantly higher fees and better before- and after-fee performance than conventional funds with similar characteristics. Differences, however, were driven exclusively by SRI funds run by management companies specialized in socially responsible investment.
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  • Javier Gil-Bazo & Pablo Ruiz-Verdú & André Santos, 2010. "The Performance of Socially Responsible Mutual Funds: The Role of Fees and Management Companies," Journal of Business Ethics, Springer, vol. 94(2), pages 243-263, June.
    • Handle: RePEc:kap:jbuset:v:94:y:2010:i:2:p:243-263
    DOI: 10.1007/s10551-009-0260-4
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    More about this item

    Keywords

    socially responsible investment; mutual fund fees; mutual fund performance;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values

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