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Funds 304: Socially Responsible Investing Funds

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1.
A socially responsible investing fund would never consider owning stock in a weapons factory.
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False. Though it's probably not likely, it would be within the realm of possibility that the fund would judge the weapons factory on other SRI criteria. There is no one set of criteria that all funds agree on.
2.
Shareholder activism is a key for _______.
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Some SRI funds. Some SRI funds engage in shareholder activism to reform companies. Others simply shun those companies.
3.
There is a religious objection to investments that pay interest.
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True. Islamic investing forbids the paying of interest, and therefore many Islamic mutual funds do not invest in bonds.
4.
The average socially responsible investing fund's costs are _______.
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More than the average non-SRI fund's. These funds are often smaller than non-SRI funds and therefore don't enjoy the same economies of scale. Further, some SRI funds charge higher management fees, taking into account the added costs of SRI screening and research.
5.
Which statement is false?
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It's easy to build a well-diversified, high-quality portfolio made up only of SRI. Building an all-SRI portfolio can be difficult. There just is not an abundance of good choices in some areas of the market, especially bonds and international stocks.