SRI funds and performance: food for thought

Posted on: September 1st, 2011

SRI funds and performance: food for thought

Probably the most common area of debate between SRI’s ‘supporters’ and its ‘sceptics’ is whether or not SRI approaches help or hinder investment performance.

In a world where environmental, social and governance issues are increasingly important – failing to significantly integrate analysis of such issues into investment strategies can be seen as at best shortsighted – or – even worse – as irresponsible, by SRI’s supporters.

As a result of this additional analysis SRI funds should be better informed than other funds and should – all other things being equal – benefit as a result.

Yet as with any aspects of economic or business analysis, level playing fields are rare.    ‘All other things’ are not always equal and so the results of ‘extra-financial’ analysis can be are not always clear.

As a result the fund management community has learned to turn this argument on its head, asking the question such as ‘Does sustainable and responsible investmenting  come with a performance penalty?’, indeed this is the title of a Hendersons news article posted yesterday.

This post contains a number of useful references and links that will help advisers to understand this area better.  Well worth a quick read!