SRI Funds: Investor Demand, Exogenous Shocks and ESG Profiles
We provide evidence that investor demand for socially responsible or sustainable and responsible (SRI) mutual funds differs from that of conventional funds in that flows to SRI funds have shown greater growth and more persistence than flows to conventional funds. More importantly, using a differences-in-differences approach we provide evidence that these attributes appear to result from investors’ nonfinancial considerations. However, as these funds have become more mainstream, there has been convergence in investor resilience. We also find a high level of persistence in SRI funds’ ESG profiles, which are generally different from those of conventional funds, consistent with their charters.