SRI Mutual Fund and Index Performance


Bank of America Chair and Professor of Finance, Rollins College


The rise of social and ethical investments has received the attention of both practitioners and academicians and has become an important development in the financial community over the last few decades. Individuals have increased levels of awareness for the social issues that affect the quality of their lives. For example, people have a better understanding of health hazards associated with nicotine and tobacco smoke and hence have distanced themselves from these products, including divesting from firms that produce them. Although the origin of social investing goes back several centuries, modern social investing can be traced to the 1960s. The foundation of social investing stems from the concerns of investors on human rights abuses, environmental degradation, and exploitation of workers. These investors harbor the notion that companies should be accountable for their actions in these areas. Managers who take into account social responsibility criteria in selecting securities for their portfolios have received attention from investors. For example, the Social Investment Forum (2010) reports that the total net assets of funds incorporating socially responsible criteria to their investment decisions increased from $12 billion in 1995 to $569 billion in 2010, while the number of socially responsible funds increased from 55 funds in 1995 to 493 ...

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