This study measures the financial impact of screening for environmental, social and governance criteria on corporate bond portfolios. Specifically, the risk-adjusted financial performance of 103 ...socially responsible bond funds in the US and the Eurozone is compared with a matched sample of conventional funds. During the period 2001–2014, socially responsible bond funds outperform by one-half of one percent annually. An evaluation of fund holdings and a performance-attribution analysis suggest that this outperformance is directly related to the mitigation of ESG risks, which is achieved by the exclusion of corporate bond issuers with poor corporate social responsibility activities. A separation of crisis and non-crisis periods further indicates that the outperformance is especially likely to occur during recessions or bear market periods. We confirm this crisis-related return effect from a sample of socially screened bond indices. Moreover, our results are robust to alternative definitions of sustainability, survivorship bias, fund characteristics and stable in the US and Eurozone sub-samples.
Developments in technology and information make it easier for Millennials and Z generations to access investment information and make investments through smartphones. Mutual fund investment can be ...the best alternative choice for beginners who want to start investing because mutual funds are investment products that are relatively easy to understand and accessible to anyone. In this regard, the use of digital platforms and applications makes the mutual fund investment transaction process faster and simpler, one of which is the Bibit application. The Bibit application is a platform used for mutual fund investment that provides mutual fund purchases with an affordable investment nominal.The purpose of this study is to analyze and describe the reasons Millennials and Z generations are motivated to save mutual funds in the Bibit application. This type of research uses netnography research with a qualitative approach. Data collection techniques by extracting comment content on Bibit Instagram posts. Meanwhile, data analysis used comment content analysis on Bibit Instagram posts and thematic analysis using Atlas.ti. The results showed that people's motivation to invest in the Bibit application was due to several factors including 1) self-control, 2) financial parenting, 3) financial management, 4) financial allocation, 6) investment, 7) profit, 8) addiction to saving, 9) financial freedom, 10) well-being. The results of this study can practically be used by future researchers to analyze online community interactions, especially mutual fund investment analysis in the Bibit application using the netnographic method for initial in-depth studies as a provision for conducting field research.
To rationalize the well-known underperformance of the average actively managed mutual fund, we exploit the fact that retail funds in different market segments compete for different types of ...investors. Within the segment of funds marketed directly to retail investors, we show that flows chase risk-adjusted returns, and that funds respond by investing more in active management. Importantly, within this direct-sold segment, we find no evidence that actively managed funds underperform index funds. In contrast, we show that actively managed funds sold through brokers face a weaker incentive to generate alpha and significantly underperform index funds.
Purpose
This paper updates the literature regarding the performance of constrained US mutual funds by looking at the relative performance of Christian mutual funds, socially responsible funds and ...Islamic funds. This paper aims to rank the performance of religious and ethical investment funds.
Design/methodology/approach
This study uses monthly returns from 2005 to 2015 to perform traditional asset pricing models as well as data envelopment analysis to determine rank.
Findings
Islamic mutual funds outperform socially responsible funds, which then outperform Christian-based mutual funds; these results are also consistent during the latest 2007-2008 crisis period. The results are robust to different performance metrics and benchmarks. Moreover, this paper reports a significant amount of money “left on the table” by investing in constraint funds and disregarding the sin industry which shows an ethical dilemma for investors.
Practical implications
Investors who seek to invest morally/ethically can be informed of the cost of doing so. They can also compare portfolio with others that have similar holdings and constraints.
Originality/value
This paper not only includes Christian mutual funds in the research but also provides the performance of all constrained assets. It also compares religious funds with “SIN” industry, and thus quantifies the cost of “doing right.”
Mutual fund investors could contribute to sustainable development by encouraging fund managers to channel their savings into the funding of sustainable energy projects adopted by firms. This study ...examines whether renewable‐energy investors take into account financial and/or nonfinancial factors when making the decision to invest in a specific fund, comparing their investment behavior with that of black‐energy and conventional investors. To this end, we have gathered information about 4,368 mutual funds (76 renewable‐energy funds, 109 black‐energy funds, and 4,183 conventional mutual funds) from January 2007 to December 2017. For this sample, we adopt a panel‐data approach with Petersen's standard errors clustered by fund and year. Our results indicate that renewable‐energy fund investors are less sensitive to past financial performance than are black‐energy and conventional fund investors, indicating that the former derive their utility from nonfinancial attributes whereas black‐energy investors derive their utility from a conditional multiattribute and conventional fund investors derive their utility from financial attributes.
The aggregate portfolio of actively managed U.S. equity mutual funds is close to the market portfolio, but the high costs of active management show up intact as lower returns to investors. Bootstrap ...simulations suggest that few funds produce benchmark-adjusted expected returns sufficient to cover their costs. If we add back the costs in fund expense ratios, there is evidence of inferior and superior performance (nonzero true α) in the extreme tails of the cross-section of mutual fund α estimates.
Financial economics and corporate governance have long focused on the agency problems between corporate managers and shareholders that result from the dispersion of ownership in large publicly traded ...corporations. In this paper, we focus on how the rise of institutional investors over the past several decades has transformed the corporate landscape and, in turn, the governance problems of the modern corporation. The rise of institutional investors has led to increased concentration of equity ownership, with most public corporations now having a substantial proportion of their shares held by a small number of institutional investors. At the same time, these institutions are controlled by investment managers, which have their own agency problems vis-à-vis their own beneficial investors. We develop an analytical framework for understanding the agency problems of institutional investors, and apply it to examine the agency problems and behavior of several key types of investment managers, including those that manage mutual funds—both index funds and actively managed funds—and activist hedge funds. We show that index funds have especially poor incentives to engage in stewardship activities that could improve governance and increase value. Activist hedge funds have substantially better incentives than managers of index funds or active mutual funds. While their activities may partially compensate, we show that they do not provide a complete solution for the agency problems of other institutional investors.
Individual investor mutual fund flows Ivković, Zoran; Weisbenner, Scott
Journal of financial economics,
05/2009, Volume:
92, Issue:
2
Journal Article
Peer reviewed
Open access
This paper studies the relation between individuals’ mutual fund flows and fund characteristics, establishing three key results. First, consistent with tax motivations, individual investors are ...reluctant to sell mutual funds that have appreciated in value and are willing to sell losing funds. Second, individuals pay attention to investment costs as redemption decisions are sensitive to both expense ratios and loads. Third, individuals’ fund-level inflows and outflows are sensitive to performance, but in different ways. Inflows are related only to “relative” performance, suggesting that new money chases the best performers in an objective. Outflows are related only to “absolute” fund performance, the relevant benchmark for taxes.
Stay the Course Bogle, John C
2018, 2018-11-16, 2018-11-29
eBook
A journey through the Index Revolution from the man who started it all Stay the Course is the story the Vanguard Group as told by its founder, legendary investor John C. Bogle. This engrossing book ...traces the history of Vanguard—the largest mutual fund organization on earth. Offering the world's first index mutual fund in 1976, John Bogle led Vanguard from a $1.4 billion firm with a staff of 28 to a global company of 16,000 employees and with more than $5 trillion in assets under management. An engaging blend of company history, investment perspective, and personal memoir, this book provides a fascinating look into the mind of an extraordinary man and the company he created. John Bogle continues to be an inspiring and trusted figure to millions of individual investors the world over. His creative innovation, personal integrity, and stubborn determination infuse every aspect of the company he founded. This accessible and engaging book will help you: * Explore the history of some of Vanguard's most important mutual funds, including First Index Investment Trust, Wellington Fund, and Windsor Fund * Understand how the Vanguard Group gave rise to the Index Revolution and transformed the lives of millions of individual investors * Gain insight on John Bogle's views on values such as perseverance, caring, commitment, integrity, and fairness * Investigate a wide range of investing topics through the lens of one of the most prominent figures in the history of modern finance The Vanguard Group and John Bogle are inextricably linked—it would be impossible to tell one story without the other. Stay the Course: The Story of Vanguard and the Index Revolution weaves these stories together taking you on a journey through the history of one revolutionary company and one remarkable man. Investors, wealth managers, financial advisors, business leaders, and those who enjoy a good story, will find this book as informative and unique as its author.
Compared to matched conventional mutual funds, socially responsible mutual funds outperform during periods of market crises. This dampening of downside risk comes at the cost of underperforming ...during non-crisis periods. Investors seeking downside protection would value the asymmetry of these returns. This asymmetric return pattern is driven by the mutual funds that focus on environmental, social, or governance (ESG) attributes and is especially pronounced in ESG funds that use positive screening techniques. Furthermore, the observed patterns are attributed to the funds’ socially responsible attributes and not the differences in fund portfolio management or the characteristics of the companies in fund portfolios.
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