TY - JOUR
T1 - Ethical investments and financial performance
T2 - An international evidence
AU - Azmi, Wajahat
AU - Mohamad, Shamsher
AU - Shah, Mohamed Eskandar
N1 - Publisher Copyright:
© 2019 Elsevier B.V.
PY - 2020/9
Y1 - 2020/9
N2 - This paper examines the financial performance of ethical funds in different regions and concludes that there is a cost attached to ethical investing. An analysis of 964 mutual funds comprising of Socially responsible funds (SRFs) and the Shariah-compliant equity funds (SCFs) suggests that: a) except for global funds, both types of funds underperform in the market, b) both types of funds are preferred for investment in growth and momentum stocks, c) SRFs are preferred for small capitalized stocks whereas SCFs do not follow any specific style or investment strategy, d) unlike SRFs, SCFs do not provide a safe haven for investors during crises. These findings are probably due to the lack of diversification opportunities and poor managerial skills. The results are robust to various asset pricing models and macroeconomic factors.
AB - This paper examines the financial performance of ethical funds in different regions and concludes that there is a cost attached to ethical investing. An analysis of 964 mutual funds comprising of Socially responsible funds (SRFs) and the Shariah-compliant equity funds (SCFs) suggests that: a) except for global funds, both types of funds underperform in the market, b) both types of funds are preferred for investment in growth and momentum stocks, c) SRFs are preferred for small capitalized stocks whereas SCFs do not follow any specific style or investment strategy, d) unlike SRFs, SCFs do not provide a safe haven for investors during crises. These findings are probably due to the lack of diversification opportunities and poor managerial skills. The results are robust to various asset pricing models and macroeconomic factors.
KW - Ethical funds
KW - Macroeconomic factors
KW - Managerial skills
KW - Performance evaluation
KW - Shariah compliant funds
KW - Socially responsible funds
UR - http://www.scopus.com/inward/record.url?scp=85066432439&partnerID=8YFLogxK
U2 - 10.1016/j.pacfin.2019.05.005
DO - 10.1016/j.pacfin.2019.05.005
M3 - Article
AN - SCOPUS:85066432439
SN - 0927-538X
VL - 62
JO - Pacific Basin Finance Journal
JF - Pacific Basin Finance Journal
M1 - 101147
ER -