Abstract
This chapter studies the performance of socially responsible investing (SRI) mutual funds, especially during the financial crisis. The findings show that SRI funds earn worse crisis-period returns than conventional funds. As SRI funds invest more in high corporate socially responsible (CSR) firms, the results are inconsistent with earlier evidence that high CSR firms earns superior crisis-period stock returns than low CSR firms. We explain this by longer investor horizon and more prosocial clientele of SRI funds. SRI funds on average have longer investor horizon than conventional funds, and fund flows of SRIs are less sensitive to past returns compared to conventional funds. SRIs poor crisis period returns do not seem to persist over the longer term.
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