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The purpose of this study is to segment and profile socially responsible investment (SRI) funds based on investment strategies they use. Specifically, the paper investigates how different SRI strategies are applied and how they are related to fund-level characteristics, with the goal of recognising their potential dominant combinations in SRI practice.

Cluster analysis was complemented with one-way ANOVA to classify 147 SRI funds from 11 European countries into different groups based on the diversification (number and type) and application (intensity of usage) of the investment strategies. Discriminant analysis and chi-square tests were conducted to profile the clusters. Financial performance was examined by running multiple hierarchical regression and dominance analyses to determine meaningfulness of particular investment strategies within each of the SRI fund clusters.

Three basic SRI fund clusters were recognised: strong-intensity strategic heterogeneity, weak-intensity strategic heterogeneity and weak-intensity strategic homogeneity. The combination of SRI strategies used in the weak-intensity strategic homogeneity cluster significantly explained the variance in mid-term financial returns.

Fund managers may use these results to make more informed investment decisions on the selection and the application of SRI strategies.

Financial industry has significant and broad and not only economic but also social implications. This research effort results in better understanding of the SRI universe, potentially leading to a broader consideration of the societal impact of financial investment.

The author provided useful insights into existing bundles of SRI strategies used in the European SRI market, recognised dominant investment strategies within SRI strategy portfolios and reported how strategic variety is related to fund-level characteristics.

The purpose of this paper is to examine the risk-adjusted performance of Brazilian SRI stock funds.

Risk-adjusted performance of 11 Brazilian socially responsible investment (SRI) funds relative to local index funds and matched pairs of funds.

SRI funds performed as well as portfolios representing the broad market on a risk-adjusted basis, both before and during the global financial crisis. Independent investment houses are not interested in SRI funds. Large financial conglomerates may see these funds as part of their corporate social responsibility image strategy.

Brazilian SRI funds are a very small niche in the stock mutual fund universe of the country, thus, the small sample (universe) of SRI funds, as far as the author's knew. One cannot say that independent asset managers do not include SRI screening in their stock selection criteria. The use of SRI screening by the most prominent independent asset managers is a potential topic for future research.

Brazilian SRI funds did not represent an extra screening filter cost to their investors. The majority of asset managers do not consider this strategy important enough to deserve an exclusive vehicle.

As SRI funds did not posit an extra screening cost, they may deserve a greater share of the mutual fund market, stimulating more SRI.

The performance of Brazilian SRI stock funds had not been examined in the international literature. Brazil has vast natural resources, a very large economy and the fourth largest mutual fund industry in the world, but was overlooked.

The anti-apartheid movement represented a cornerstone for socially responsible investors in the 1970s and 1980s driven by the willingness to promote lasting social change. What happened next in terms of socially responsible investing (SRI) in the free South Africa? This chapter explores the local development of SRI in South Africa post-apartheid.

An in-depth literature review combined with a content analysis 73 SRI funds’ investment mandates were undertaken to investigate the local development of SRI in South Africa over the period 1992–2012.

Mechanisms of local divergence and global convergence have both shaped the phenomenon of SRI in South Africa. SRI in South Africa represents a melting-pot of societal values anchored in a local developmental and transformative political vision, some local and global Islamic religious values, and worldwide SRI and CSR homogenisation trends.

This chapter is the first attempt to outline the mechanisms of local divergence and global convergence that have moulded SRI in a democratic South Africa.

The purpose of this paper is to examine socially responsible investment (SRI) fund performance and investigate the factors influencing fund performance.

The study uses return data from the Morningstar database for 152 SRI funds from January 1995 to May 2015. The initial analysis includes the use of various risk-adjusted performance measures, including Sharpe ratio, Treynor ratio, Information ratio, Sortino ratio and M². The study also uses four factor models, including Jensen single-factor model, Fama–French three-factor model, Carhart four-factor model and Fama–French five-factor model to explain SRI fund returns. Finally, a cross-sectional regression analysis is applied to investigate the determinants of SRI fund returns.

The results show that, on average, the SRI funds provide comparable risk-adjusted returns relative to various benchmark market indices. Market factor is significant in explaining SRI fund returns. Examining each factor model, the results do not support Fama–French’s three-factor model as neither size nor value factor is significant. The author finds weak support for Carhart’s momentum factor along with the market factor. Finally, the Fama–French five-factor model shows market, size and operating profit factors explain SRI fund returns. The study also finds the fund performance is stronger for funds with the higher turnover ratio, the larger fund size and more managerial experience and lower for funds with higher expense ratio. Also, funds formed with negative screening perform better than positive or mixed screened funds.

SRI funds have received considerable attention from investors. This study contributes to the literature by examining SRI fund performance and investigating factors influencing their performance using multiple factor models and cross-sectional regression analysis. The findings are relevant for investors who demand responsible investment opportunities without sacrificing returns for nonfinancial screenings. Findings also suggest that investors should consider fund characteristics when selecting SRI funds.

This study examines the effect of business cycle, market return and momentum on the financial performance of socially responsible investing (SRI) mutual funds using data from two complete business cycles as defined by the National Bureau of Economic Research (NBER).

A “fund of funds” approach is used to identify the extent to which SRI financial performance is affected by the macroeconomic climate. The Fama-French Three-Factor model and the Carhart four-factor model are used to bring the results into alignment with commonly used finance methodologies.

The results indicate that SRI tends to preserve value during economic contraction more than it adds value during economic expansion. Market return is important during both expansion and contraction, while momentum is important only during expansion.

These findings suggest that double screening, for both financial and social performance, enables portfolio managers of SRI funds to have insight into those companies that are particularly vulnerable during times of economic contraction.

These results bring added clarity to the mixed findings found by previous researchers examining the relationship between corporate social performance (CSP) and financial performance.

This study reinforces the idea that the financial performance of companies with high ethical standards is comparable to the financial performance of the market as a whole during times of economic expansion and superior to the market as a whole during times of economic contraction.

Business cycle analysis, along with the Fama-French Three-Factor model and the Carhart four-factor model, brings SRI research more into the realm of conventional financial analysis than previous studies.

The sustainable and responsible investing (SRI) is the part of sustainable investment which focusses on mutual funds. The purpose of this paper is to map and evaluate all the active European SRI funds, their performances and correlation with the national identity.

The sample of the research was analysed with descriptive statistics, mainly the frequency, the mean and the correlation analysis. A well-known volatility is represented by the synthetic risk and reward indicator (SRRI). Other two ratings are the environmental, social and governance (ESG) funds score distribution and the ESG funds letter rating distribution.

SRI investment may seem to be performing better than in the funds with a different focus. The segment of SRI funds will grow for the next decade.

There is a lack of definitions and clear metrics for sustainable investing. For better performance, it would be also appropriate to examine each country separately.

This paper is part of the project targeting to design a model and methodology of SI evaluation taking into account ESG factors and risks, including profitability in a selected sector. This model can be used by investors for better decision-making.

The paper focusses on the funds selecting investments that fulfil ESG criteria, which are part of the social responsibility and sustainability.

An analysis of the current approaches to evaluating investments shows that the key barrier in the transitions to sustainable investment is not taking into account the ESG factors. The research in this paper includes the ESG factors in the evaluation.

The purpose of this paper is to address reasons for consumer investment in socially responsible investment (SRI) profiled mutual funds. Specifically, the paper deals with the relative influence of financial return and social responsibility on the decision to invest in SRI profiled mutual funds.

A cluster analytic approach was used where 563 SR‐investors were classified into different segments based on their perception of importance of financial return and social responsibility. Furthermore, discriminant analysis and chi² tests were used to profile the segments.

Three segments of SR‐investors were formed. The “primarily concerned about profit” SR‐investors value financial return over social responsibility. The “primarily concerned about social responsibility” value social responsibility over financial return. The “socially responsible and return driven” SR‐investors value both return and social responsibility when deciding to invest in SRI. The segments displayed distinct differences with regard to various profiling variables.

As respondents were generated from one SRI provider, it is possible that the respondents are not fully representative of all SR‐investors.

Since there are segments of SR‐investors that invest in SRI because of different reasons, there is an opportunity for SRI providers to target and adapt communication to certain segments.

For both academia and the SRI industry this study provides useful knowledge on how private SR‐investors handle the issue of financial return and social responsibility when investing in SRI. This understanding of the differing motivations of the SR‐investor also holds practical importance for developing appropriate marketing strategies within the SRI industry.

This paper aims to present to capital market regulators (particularly in Turkey) with options for regulating the quickly expanding area of socially responsible investment (SRI).

The paper takes a public economics perspective, focusing on the social risks concomitant with equity investment, and presents options based on an economic analysis of the various regulatory options available to capital market regulators.

The paper finds that in the long run, the extent of national SRI‐related regulation will probably depend on the extent to which the social, environmental, and other risks targeted by SRI represent social risks (which can be mitigated by regulation as opposed to other policy instruments).

While Turkish private pension fund regulators should be mindful of wariness of other OECD member countries to regulate SRI, the particularity of the social risks faced by Turkish financial markets may militate for a unique national approach toward SRI regulation.

This study represents one of the first attempts to address the issue of domestic SRI regulation and to present evidence‐based conclusions in a policy oriented setting.

Despite the benefits of international diversification, the home equity bias phenomenon is well documented in the portfolio choice literature. The purpose of this paper is to investigate whether the same investment behavior applies to domestic socially responsible investments (SRIs) where ethical screenings should be the selection criteria.

The authors apply the model by Coval and Moskowitz (1999), Grinblatt and Keloharju (2001) and Agarwal and Hauswald (2010) to uncover the effect of distance relative to screenings on SRI domestic portfolio choice. For the first time, the authors test the robustness of distance effect by using time bias, which is the travel time between the fund manager and the company’s headquarter.

The authors find that SRIs exhibit a strong preference for locally headquartered firms. After controlling for screening activity and other fund characteristics, the authors still find a strong distance bias in SRI fund portfolio decision-making. The authors find that this bias is mostly observed in SRI fund with social screening and that fund holding characteristics determine the propensity of fund managers to invest locally. The results suggest that the local bias puzzle exists in SRI.

This study provides avenue for future research to examine whether the same local bias is found in SRI investment in other countries where they have different characteristics and behavior. Also, the evidence that local bias exists in SRI investment may need further analysis as to whether this is conflicting with the objectives of SRI, which focus more on ethical beliefs.

The results suggest that many local firms in the same city currently held by an SRI fund will not be held by this fund if it is in another city. The implications of the findings are that geographic proximity, along with ethical screenings, is an important dimension to how SRI fund invests.

This study is the first that examines local bias in SRI funds by using portfolio holding data.