EconPapers    
Economics at your fingertips  
 

Do green mutual funds perform well?

C. Edward Chang, Walt A. Nelson and H. Doug Witte

Management Research Review, 2012, vol. 35, issue 8, 693-708

Abstract: Purpose - The purpose of this paper is to compare the financial performance of green and traditional mutual funds in the USA. Design/methodology/approach - A total of 131 green mutual funds identified by US SIF, were compared with the averages of all traditional mutual funds in their respective Morningstar categories. Performance measures analyzed included annualized rates of return, expense ratios, and Sharpe ratios, among others. Most data pertained to at least the past three years, while other data pertained to the most recent 5 to 15 years. Findings - The results demonstrate that green mutual funds have generated lower returns and similar risks compared to traditional mutual funds in their respective Morningstar categories. Green mutual funds have underperformed on a risk-adjusted basis. Research limitations/implications - Since there is no formal definition of a green mutual fund, the researcher and investor must make a subjective call in assessing which funds invest “green”. However, at least in this early stage in the history of green investing, green mutual funds have underperformed their peers. Originality/value - Results confirm the limitations of green investing as suggested by various researchers, among them Sharpe, Rudd and Kurtz and DiBartolomeo. Results stand in contrast to Corson and Van Dyck and Statman, among others, which reported no significant underperformance for socially responsible investments.

Keywords: Green investments; Financial performance; Mutual funds; Social investing; Return on investment; Risk; Financial risk; United States of America (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (12) Track citations by RSS feed

Downloads: (external link)
http://www.emeraldinsight.com/10.1108/014091712112 ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:mrrpps:v:35:y:2012:i:8:p:693-708

Ordering information: This journal article can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://www.emerald.com/mrr.htm

Access Statistics for this article

Management Research Review is currently edited by Joseph Sarkis

More articles in Management Research Review from Emerald Group Publishing
Bibliographic data for series maintained by Louise Lister ().

 
Page updated 2021-09-11
Handle: RePEc:eme:mrrpps:v:35:y:2012:i:8:p:693-708