Publication:
Ethical investments and financial performance: an international evidence
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Date
2019
SDG:
Abstract
This paper examines the financial performance of ethical funds in different regions and concludes that there is a cost attached to ethical investing. An analysis of 964 mutual funds comprising of Socially responsible funds (SRFs) and the Shariah-compliant equity funds (SCFs) suggests that: a) except for global funds, both types of funds underperform in the market, b) both types of funds are preferred for investment in growth and momentum stocks, c) SRFs are preferred for small capitalized stocks whereas SCFs do not follow any specific style or investment strategy, d) unlike SRFs, SCFs do not provide a safe haven for investors during crises. These findings are probably due to the lack of diversification opportunities and poor managerial skills. The results are robust to various asset pricing models and macroeconomic factors.
Keywords
Ethical funds , Performance evaluation , Macroeconomic factors , Shariah compliant funds , Socially responsible funds , Managerial skills
Citation
Naeem Azmi, C. W., Ramadili Mohd, S. M., & Mohd Rasid, M. E. S. (2020). Ethical investments and financial performance: an international evidence. Pacific-Basin Finance Journal, 62. https://doi.org/10.1016/j.pacfin.2019.05.005
Publisher
Elsevier B.V.