Business and Society

Investing in SRI funds run by specialized companies does not carry a price

September 2, 2011 | 1 min read

In their paper, the authors Javier Gil-Bazo (Pompeu Fabra University), Pablo Ruiz-Verdú (Carlos III University of Madrid) and André A.P. Santos (Federal University of Santa Catarina) shed light on the question “whether mutual funds constrained by a socially responsible investment strategy underperform conventional mutual funds that are not subject to that constraint.” The authors “separately analyzed the contributions of before-fee performance and fees to SRI funds' performance.” They looked at the role of fund management companies in the determination of those variables. “To improve upon the matched-pair analysis employed in several prior studies, we used the matching estimator methodology of Abadie and Imbens1.

Their conclusion: SRI funds significantly outperform comparable conventional funds between 0.96% and 1.83% per year before expenses. “The differences, however, are driven exclusively by SRI funds run by management companies specialized in SRI. Because … funds run by companies not specialized in SRI underperform their matched conventional funds. We find no significant differences in fees between SRI and conventional funds except in one case: SRI funds are cheaper than conventional funds run by the same management company.”

Therefore, the authors suggest “that investors should take into account management company characteristics, particularly their specialization in SRI, when investing in SRI funds.”

This study received an Honorable Mention in the 2008 Moskowitz Prize competition (awarded by the Center for Responsible Business at the Haas School of Business, in cooperation with the Social Investment Forum, the Moskowitz Prize promotes the concept, practice, and growth of socially responsible investing).


1Abadie, Alberto and Imbens, Guido W., A Martingale Representation for Matching Estimators (February 2009). NBER Working Paper Series, Vol. w14756, pp. -, 2009. Available at SSRN:

This article may be reproduced according to our terms of use with attribution (and link, if online) to To be cited as: “Investing in SRI funds run by specialized companies does not carry a price”, Javier Gil-Bazo, Pablo Ruiz-Verdú, André A.P. Santos,, September 2, 2011.

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