Do Socially Responsible Investment Funds Sell Losses and Ride Gains? The Disposition Effect in SRI Funds

An increasing percentage of the total net assets under professional management is devoted to ethical investments. Socially responsible investment (SRI) funds have a dual objective: building an strategy based on environmental, social, and corporate governance (ESG) screens providing financial returns investors. In current study, we investigate whether this objective has influence behavior mutual fund managers in realization gains losses. Evidence shown that most investors SRI invest those primarily because their social concerns. If motivations align with investors, might then more incentives than conventional hold onto losing stocks if they feel value compensates for economic loss. We hypothesize would be less prone disposition effect managers. Pertaining effect, do not find evidence difference compared Our results hold, even when considering market trends, structure, gender, prior performance.