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Why Do Investors Hold Socially Responsible Mutual Funds?
Open accessAbstract
To understand why investors hold socially responsible mutual funds, we link administrative data to survey responses and behavior in incentivized experiments. We find that both social preferences and social signaling explain socially responsible investment (SRI) decisions. Financial motives play less of a role. Socially responsible investors in our sample expect to earn lower returns on SRI funds than on conventional funds and pay higher management fees. This suggests that investors are willing to forgo financial performance in order to invest in accordance with their social preferences.
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“First, retail SRI demand is often driven by pro-social preferences (see Riedl and Smeets (2017)), rather than explicit public commitments to ESG often made by institutional investors.”
From Sustainability Preferences Under Stress: Evidence from COVID-19 (2020) · cites this paper as Riedl and Smeets (2017)
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“All of this makes institutions less likely to turn away from sustainable investments during market turbulence and economic downturns, compared to retail investors.”
From Sustainability Preferences Under Stress: Evidence from COVID-19 (2020) · cites this paper as Riedl and Smeets (2017)
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Metadata
- Authors
- RIEDL, A., & SMEETS, P.
- Affiliations
- Heidelberg University (DE)
- Maastricht University (NL)
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 2017-09-14
- Volume
- 72
- Issue
- 6
- Pages
- 2505-2550
- ISSN
- 0022-1082 (ISSN-L)
- 1540-6261
- OpenAlex
- W2754962058
- Cited by
- 1,378
- References
- 74
- Citations by year
- 2026: 201 · 2025: 221 · 2024: 251 · 2023: 201 · 2022: 171 · 2021: 132 · 2020: 98 · 2019: 59 · 2018: 26 · 2017: 12
- FWCI
- 77.43
- Type
- journal article
- Language
- en
- Open access
- bronze
- doi.org
- Locations
- The Journal of Finance (publishedVersion)
- Research Publications (Maastricht University) (submittedVersion, other-oa)
- Funders
- Stiftelsen för Miljöstrategisk Forskning
- Nederlandse Organisatie voor Wetenschappelijk Onderzoek (016.Veni.175.019, 016.Veni, 451-16-005)
- University of California, San Diego
- Topics
- Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
- Social Sciences › Business, Management and Accounting › Strategy and Management › Corporate Social Responsibility Reporting
- Social Sciences › Economics, Econometrics and Finance › Finance › Sustainable Finance and Green Bonds
- Keywords
- socially responsible investment, socially responsible mutual funds, social preferences, social signaling, investor behavior, mutual fund returns, management fees, financial motives, behavioral finance
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Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
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