Economic policy uncertainty and active management: Evidence from SRI funds

Neveen Ahmed, Barbara Abou Tanos, Omar Farooq and Mohammed Bouaddi

Finance Research Letters, 2025, vol. 79, issue C

Abstract: This study explores the impact of economic policy uncertainty (EPU) on the relationship between active management and the performance of socially responsible mutual funds. Using data on U.S. socially responsible funds, we show that active management is more valuable in periods characterized by high EPU. The findings are robust across different fund characteristics, active management metrics, EPU proxies, and fund performance measures. Our results are further validated using multiple estimation techniques. Additionally, funds that are younger, smaller, with higher expenses, lower turnover, and slower growth are more likely to benefit from active management as economic policy uncertainty increases.

Keywords: Mutual funds; Performance; Active management; Environmental, social, and governance; Economic policy uncertainty (search for similar items in EconPapers)
JEL-codes: D81 G11 G14 G23 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:79:y:2025:i:c:s1544612325006026

DOI: 10.1016/j.frl.2025.107339

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