Socially Responsible Mutual Funds (corrected)

TLDR

Socially responsible investing is debated because it mixes factual performance with ideological beliefs, with proponents seeing it as beneficial and opponents viewing it as unwise or illegitimate. The article aims to disentangle factual evidence from ideological beliefs regarding socially responsible investing. During 1990–98, socially responsible mutual funds outperformed conventional funds but trailed the S&P 500, and while the Domini Social Index beat the S&P 500, risk‑adjusted differences were not statistically significant. Errata.

Abstract

Conversations about socially responsible investing are difficult because they combine facts with beliefs. Proponents of socially responsible investing believe that combining social goals with investments does good; opponents believe that such combinations are unwise or even illegitimate. In this article, I try to separate facts from beliefs. I report that the Domini Social Index, an index of socially responsible stocks, did better than the S&P 500 Index and that socially responsible mutual funds did better than conventional mutual funds over the 1990–98 period but the differences between their risk-adjusted returns are not statistically significant. Both groups of mutual funds trailed the S&P 500 Index. Errata