Abstract
Socially responsible mutual funds, also known as socially responsible invested funds, are one of the main instruments of Socially Responsible Investment (SRI). The term “fund” is used to refer to a ready-made financial product where investor’s money is pooled into a portfolio and a fund/investment manager decides which shares to buy. Therefore, this financial product is attractive for passive investors without a high degree of financial knowledge. Nevertheless, investment tools aimed at assisting the investors in their selection of socially responsible companies which serve best their social and environmental values are rather scare and this lack of tools assisting investors in SRI is even more important when we refer to socially responsible mutual funds. The aim of this paper is to assist individual passive investors in their investment decisions providing them with a ranking of mutual funds adjusted to their social, environmental and ethical particular preferences. The proposed approach is illustrated with a real US equity mutual funds’ ranking example.
Highlights
Investors seeking to invest in Social and Environmental Responsible (SER) firms have grown to become an un
This rating is based on 8 social and environmental dimensions, which are in turn, integrated by more than 60 criteria
In this paper we have considered large market capitalization funds belonging to growth or blend categories
Summary
Investors seeking to invest in Social and Environmental Responsible (SER) firms have grown to become an un-. The evaluation model proposed in this paper, instead of using screening intensity for measuring the social responsibility degree of the mutual funds, evaluates the Corporate Social Performance of each of the firms invested in by the equity mutual funds, using KLD database for U.S companies. An approach is presented that allows measurement of the socially responsible attractiveness of mutual funds for a particular investor in terms of a set of socially responsible criteria. With this aim, a mutual funds’ evaluation model is designed based on MACBETH. The formatter will need to create these components, incorporating the applicable criteria that follow
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