An Examination of the Efficacy of Christian-Based Socially Responsible Mutual Funds

Abstract

This study examines the efficacy of Christian-based socially responsible mutual funds by comparing their returns with those of the S&amp;P 500 Index as well as other types of socially responsible mutual funds. Christian-based funds have been recommended for achieving the dual purpose of investing in a manner that honors one’s faith while also being a good financial steward. However, the efficacy of these investment options is not clear. This study was developed to add to the emerging field of research regarding Christian-based socially responsible mutual funds. <b>TOPICS:</b>ESG investing, equity portfolio management, mutual fund performance <b>Key Findings</b> • Christian-based socially responsible mutual funds have been suggested as a way to honor one’s beliefs through equity investments in companies that are consistent with the Christian worldview. • While a number of funds have been developed and marketed to Christians, a limited amount of research has been conducted to closely examine the comparative efficacy of those funds. • This study provides an analysis of the current body of Christian-based equity-only socially responsible mutual funds and found that, as a group, the funds underperformed the S&amp;P 500 Index as well as other types of socially responsible mutual funds. • Post hoc analysis of the data points to variability within the universe of Christian-based socially responsible mutual funds that require additional attention and study.