Households’ Investments in Socially Responsible Mutual Funds

47 Pages Posted: 4 Mar 2018 Last revised: 24 Jun 2022

See all articles by Charlotte Christiansen

Charlotte Christiansen

Aarhus University - CREATES

Thomas Jansson

Sveriges Riksbank - Research Division

Malene Kallestrup Lamb

Aarhus University - CREATES

Vicke Noren

Aarhus University - CREATES

Date Written: November 9, 2020

Abstract

We use a large administrative panel data set to study which characteristics are related to households' investments in socially responsible investing (SRI) mutual funds. To isolate financial and non-financial preferences for SRI investments, we distinguish between two types of SRI funds; ESG and charitable funds. We also analyze to what extent liquid wealth and age play a role in allocation of SRI funds. We find that participation in SRI funds is lower for young and retired investors. Moreover, we find that young adults are more often ESG investors, while retired investors are more likely to participate in charitable funds. Further, liquid wealth is important for SRI participation but becomes less relevant once investors have sufficient liquid wealth. For the exposure to SRI funds, the overall picture is quite different as it is negatively related to wealth, income, risky share, and education. The relationship between investors' characteristics and the returns on their conventional fund portfolio are similar for conventional and SRI investors. Analysis of SRI investors' SRI fund portfolio returns do, however, indicate that SRI investors might have non-financial objectives for their SRI investments.

Keywords: household finance, portfolio choice, retail investors, SRI investments

JEL Classification: D14, D31, D64, G11, G51

Suggested Citation

Christiansen, Charlotte and Jansson, Thomas and Kallestrup Lamb, Malene and Noren, Vicke, Households’ Investments in Socially Responsible Mutual Funds (November 9, 2020). Available at SSRN: https://ssrn.com/abstract=3128432 or http://dx.doi.org/10.2139/ssrn.3128432

Charlotte Christiansen (Contact Author)

Aarhus University - CREATES ( email )

Fuglesangs Alle 4
Aarhus V, DK 8210
Denmark

Thomas Jansson

Sveriges Riksbank - Research Division ( email )

S-103 37 Stockholm
Sweden

Malene Kallestrup Lamb

Aarhus University - CREATES ( email )

School of Economics and Management
Building 1322, Bartholins Alle 10
DK-8000 Aarhus C
Denmark

Vicke Noren

Aarhus University - CREATES ( email )

School of Economics and Management
Building 1322, Bartholins Alle 10
DK-8000 Aarhus C
Denmark

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