The Performance of Socially Responsible Mutual Funds: The Role of Fees And Management Companies

33 Pages Posted: 26 Nov 2008  

Javier Gil-Bazo

Universitat Pompeu Fabra; Barcelona Graduate School of Economics (Barcelona GSE)

Pablo Ruiz-Verdú

Universidad Carlos III de Madrid

Andre A. P. Santos

Universidade Federal de Santa Catarina (UFSC) - Department of Economics

Date Written: September 25, 2008

Abstract

In this paper, we shed light on the debate about the financial performance of socially responsible investment (SRI) mutual funds by separately analyzing the contributions of before-fee performance and fees to SRI funds' performance and by investigating the role played by fund management companies in the determination of those variables. We apply the matching estimator methodology to obtain our results and find that in the period 1997-2005, US SRI funds had better before- and after-fee performance than conventional funds with similar characteristics. The differences, however, are driven exclusively by SRI funds run by management companies specialized in SRI. While these funds significantly outperform similar conventional funds, funds run by companies not specialized in SRI underperform their matched conventional funds. We find no significant differences in fees between SRI and conventional funds except in one case: SRI funds are cheaper than conventional funds run by the same management company.

Keywords: Socially responsible investment, Mutual fund fees, Mutual fund performance, Mutual Fund Management Companies

JEL Classification: G20, G23, A13, M14, G12

Suggested Citation

Gil-Bazo, Javier and Ruiz-Verdú, Pablo and A. P. Santos, Andre, The Performance of Socially Responsible Mutual Funds: The Role of Fees And Management Companies (September 25, 2008). Available at SSRN: https://ssrn.com/abstract=1307043 or http://dx.doi.org/10.2139/ssrn.1307043

Javier Gil-Bazo

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

Pablo Ruiz-Verdú (Contact Author)

Universidad Carlos III de Madrid ( email )

Calle Madrid 126
Getafe, Madrid 28903
Spain
+34 91 624 5801 (Phone)
+34 91 624 9607 (Fax)

Andre A. P. Santos

Universidade Federal de Santa Catarina (UFSC) - Department of Economics ( email )

PO Box 476
Florianopolis, SC 88010-970
Brazil

HOME PAGE: http://sites.google.com/site/andreportela

Paper statistics

Downloads
756
Rank
25,617
Abstract Views
3,306