This paper examines the flow-performance relationship and the presence of "Smart money effect" in Socially responsible funds (SRFs) and Shariah compliant funds (SCFs). A survivorship bias free sample of 686 funds comprising of 212 SCFs and 474 SRFs were analysed with investment focus in the Asia pacific, Emerging markets, Europe, Global (with no focus to any specific country or region), Middle East and North Africa (MENA) and North America. The findings show that flow-performance relationship is asymmetric for both the funds as the response to positive returns is more as compare to the negative returns for the last/current year as well as the last/current month. There is also a significant presence of "Smart money effect" in both the funds for the entire sample but there is no evidence of "Smart money effect" in SRFs for the sample of old funds.

The slides highlight the research questions on: 1) do SCF investors react positively to the past performance?; 2) is the response of SCF investors to past performance (positive or negative) similar to that of SRF investors?; 3) do these funds respond asymmetrically to positive/negative returns?; 4) are SCF's and SRFs financially smart?