The money-flows of socially responsible investment funds around the world

L.D.R. Renneboog, J.R. Ter Horst, C. Zhang

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review

4 Citations (Scopus)


This chapter studies the money flows into and out of socially responsible investment (SRI) funds around the world. In their investment decisions, investors in SRI funds may be more concerned with ethical or social issues than with fund performance. Therefore, SRI money flows are less related to past fund returns. Ethical money is less sensitive to past negative returns than are conventional fund flows, especially when SRI funds primarily use negative or sin/ethical screens. Social attributes of SRI funds weaken the relationship between money inflows and past positive returns. However, money flows into funds with environmental screens are more sensitive to past positive returns than are conventional fund flows. Stock picking based on in-house SRI research increases the money flows. These results give evidence on the role of nonfinancial attributes, which induce heterogeneity of investor clienteles within SRI funds. No evidence of a smart money effect is found, as the funds that receive more inflows neither outperform nor underperform their benchmarks or conventional funds.
Original languageEnglish
Title of host publicationSocially Reponsible Finance and Investing
Subtitle of host publicationFinancial Institutions, Corporations, Investors and Activists
EditorsH.K. Baker, J.R. Nofsinger
Place of PublicationHoboken, New Jersey
PublisherJohn Wiley & Sons
Number of pages515
ISBN (Print)9781118100097
Publication statusPublished - 2012

Publication series

NameRobert W. Kolb Series


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