The urge to act: a comparison of active and passive socially responsible investment funds in the United States

Xing Chen; Bert Scholtens

doi:10.1002/csr.1529

The urge to act: a comparison of active and passive socially responsible investment funds in the United States

Xing Chen, Bert Scholtens^*

^*Corresponding author for this work

Centre for Responsible Banking and Finance

Research output: Contribution to journal › Article › peer-review

21 Citations (Scopus)

11 Downloads (Pure)

Abstract

Innovative finance vehicles are required to facilitate the transition towards a sustainable society. Here, we investigate two very successful innovations in the fund industry, namely, the index mutual funds and the passively managed exchange traded funds (ETFs). We study socially responsible investment funds in the US and particularly focus on their financial performance, cost of investing, and degree of active management. We do not find persuasive evidence that the actively managed funds perform better than their passively managed counterparts do. Furthermore, we find that some active SRI funds seem to operate as ‘closet indexers’ with a low degree of active management. We conclude that passively managed socially responsible funds have the potential to enrich the spectrum of financial products that may help advance the sustainability transition.

Original language	English
Pages (from-to)	1154-1173
Number of pages	20
Journal	Corporate Social Responsibility and Environmental Management
Volume	25
Issue number	6
Early online date	13 Jun 2018
DOIs	https://doi.org/10.1002/csr.1529
Publication status	Published - 15 Nov 2018

Keywords

Active versus passive fund performance
ETF
Funds
Socially responsible investing
United States

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10.1002/csr.1529

Chen_2018_CSREM_Urgetoact_AAM
Copyright © 2018 John Wiley & Sons, Ltd and ERP Environment. This work has been made available online in accordance with the publisher’s policies. This is the author created, accepted version manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at: https://doi.org/10.1002/csr.1529
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Cite this

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The urge to act: a comparison of active and passive socially responsible investment funds in the United States

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Keywords

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