Hoje Jo
Santa Clara University
Tamanna Saha
New York University
Roopali Sharma
Santa Clara University
Sylvie Wright
Santa Clara University
Abstract
We examine the performance of socially responsible investing (SRI) vs. vice investing through sin funds. Our research shows while the annualized return of SRI through Domini Social Index (DS 400 Index) from 1990 to 2009 has been higher than that of S&P 500, the relative 5 and 10-year returns are more favorable in S&P 500. We also find that while SRI through Domini Social Equity Mutual Fund (DSEFX) outperformed vice investing through vice fund (VICEX) over the most recent one year, VICEX has outperformed DSEFX over the long term. Presumably, U.S. investors sacrifice returns by investing in social responsibility.
Extract:
There has been ongoing debate about the performance of socially responsible investing (SRI) during the last twenty years. Previous studies suggest that the findings on SRI reveal insignificantly different results from conventional funds (Hamilton, Jo, ans Statman, 1993; Statman, 2000). A growing number of academic studies have demonstrated that SRI mutual funds perform competitively with non-SRI conventional funds over time. The recent growth of SRI indicates that investment communities prefer to combine SRI’s comparable return with their concerns on social responsibility. SRI investing has become part of the mainstream, and as a result, a number of conventional companies now offer SRI products to their clients. More investors adopt and use SRI strategies not only because such investment approach focuses on companies with socially responsible principle and avoids “sinful” businesses, but also because return are comparable to those of more conventional investments....
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