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Socially Responsible Investments

Meir Statman

Santa Clara University - Department of Finance

June 2007

What do we know about socially responsible investments? What distinguishes socially responsible companies from conventional companies? Should investors expect socially responsible investments to yield higher or lower returns than conventional investments? What has been the performance of socially responsible portfolios relative to conventional portfolios? What are the tracking errors of socially responsible portfolios and what can investors do to reduce them? In this article I answer questions about socially responsible investments.

Many financial advisors perceive socially responsible portfolios as undiversified portfolios whose performance is sure to trail that of conventional portfolios. But reality is different from perception. Financial advisors can construct for their investors portfolios that perform as well as conventional portfolios, or even better, whether through mutual funds or separate accounts.

Number of Pages in PDF File: 52

Keywords: socially responsible investing, behavioral finance, investor behavior, asset pricing model, market efficiency, portfolios

JEL Classification: G11, G12, G14, G23, G24

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Date posted: June 28, 2007  

Suggested Citation

Statman, Meir, Socially Responsible Investments (June 2007). Available at SSRN: https://ssrn.com/abstract=995271 or http://dx.doi.org/10.2139/ssrn.995271

Contact Information

Meir Statman (Contact Author)
Santa Clara University - Department of Finance ( email )
500 El Camino Real
Santa Clara, CA 95053
United States
408-554-4147 (Phone)
408-554-4029 (Fax)
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