Cross-Subsidization in SRI Fund Families

41 Pages Posted: 21 Sep 2018

See all articles by Fajri Adrianto

Fajri Adrianto

Universitas Andalas - Faculty of Economic

En-Te (John) Chen

Queensland University of Technology; Financial Research Network (FIRN)

Janice C. Y. How

Queensland University of Technology; Financial Research Network (FIRN)

Date Written: September 2, 2018

Abstract

We investigate the existence of strategic cross-fund subsidization in SRI fund families. For a sample of SRI fund families domiciled in the U.S., we find evidence of cross-fund subsidization on performance where winning funds are subsidized by peer losing funds. However, there is no evidence of cross-fund subsidization between high-fee and low-fee funds, and between young and mature funds of the same family. Cross-fund subsidization is attenuated by manager ownership in subsidizing funds, and is more likely to occur between sibling funds with ethical screening than with environmental, social, and combined environmental-social-governance (ESG) screening.

Keywords: Fund Families, SRI Funds, Cross-Fund Subsidization, ESG Principles, Agency Conflicts

JEL Classification: G12, A13, Z13

Suggested Citation

Adrianto, Fajri and Chen, En-Te and How, Janice C. Y., Cross-Subsidization in SRI Fund Families (September 2, 2018). Available at SSRN: https://ssrn.com/abstract=3243002 or http://dx.doi.org/10.2139/ssrn.3243002

Fajri Adrianto (Contact Author)

Universitas Andalas - Faculty of Economic ( email )

Kampus Limau Manih
Padang, West Sumatra 25163
Indonesia

En-Te Chen

Queensland University of Technology ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia
61-7-3864-2658 (Phone)
61-7-3864-1500 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Janice C. Y. How

Queensland University of Technology ( email )

2 George Street
Brisbane, Queensland 4000
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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