Competition of Socially Responsible and Conventional Mutual Funds and its Impact on Fund Performance

55 Pages Posted: 9 Jun 2013

See all articles by Francis Haeuck In

Francis Haeuck In

Monash University - Department of Accounting; Financial Research Network (FIRN)

Martin Kim

Monash University

Raphael Jonghyeon Park

University of Technology Sydney (UTS) - UTS Business School

Date Written: June 9, 2013

Abstract

This paper examines the impact of both socially responsible (SR) and conventional entrant funds on SR incumbent funds using an overlap in portfolio holdings to measure the impact of competition in the US mutual fund industry. This paper’s findings indicate that over the past decade the increase in competition from SR entrants has been associated with an increase in fees but not in capital flow. Moreover, our results show that the increase in the number of SR fund entrants does not have a negative impact on fund performance. This finding implies that despite the significant increase in the number of SR funds entering the market, open and free competition fosters the performance of SR fund participants. Our study concludes that despite the recent growth in the number of SR funds, the SR mutual fund market does not exhibit the key features of a competitive market.

Keywords: Mutual funds, Competition, Socially responsible investing

JEL Classification: G11, G23

Suggested Citation

In, Francis Haeuck and Kim, Martin and Park, Raphael Jonghyeon, Competition of Socially Responsible and Conventional Mutual Funds and its Impact on Fund Performance (June 9, 2013). Available at SSRN: https://ssrn.com/abstract=2276624 or http://dx.doi.org/10.2139/ssrn.2276624

Francis Haeuck In

Monash University - Department of Accounting ( email )

Building 11E
Clayton, Victoria 3800
Australia
+61 3 9905 1561 (Phone)
+61 3 9905 5475 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Martin Kim

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Raphael Jonghyeon Park (Contact Author)

University of Technology Sydney (UTS) - UTS Business School ( email )

Sydney
Australia

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