SRI Funds: Nomen est Omen

Authors

  • Alexander Kempf,

    1. The authors are both from the Department of Finance and Centre for Financial Research (CFR), University of Cologne.
    Search for more papers by this author
  • Peer Osthoff

    Corresponding author
    1. The authors are both from the Department of Finance and Centre for Financial Research (CFR), University of Cologne.
      * Address for correspondence: Peer Osthoff, University of Cologne, Department of Finance and Centre for Financial Research (CFR), Albertus – Magnus – Platz, 50923 Koeln, Germany. e-mail: osthoff@wiso.uni-koeln.de
    Search for more papers by this author

* Address for correspondence: Peer Osthoff, University of Cologne, Department of Finance and Centre for Financial Research (CFR), Albertus – Magnus – Platz, 50923 Koeln, Germany. e-mail: osthoff@wiso.uni-koeln.de

Abstract

Abstract:  We test the frequently made claim that SRI funds are conventional funds in disguise. For this purpose, we compare the portfolio holdings of SRI funds to conventional funds with respect to their social and environmental standards. Our empirical study of US equity funds shows that SRI funds have a significantly higher ethical ranking than standard funds, i.e., they are not conventional funds in disguise. This result holds for all ethical criteria we investigate. It is stable over time and holds after controlling for several fund characteristics. Finally, we find no evidence that our result is generated by window dressing strategies of SRI funds.

Ancillary