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Funds 304: Socially Responsible Investing Funds

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1.
People who choose socially responsible investing funds are motivated by the same issues.
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False. The issues that drive SRI investors vary greatly. For example, one investor may place great value on diversity in the workplace, while another may not.
2.
All socially responsible investing funds use shareholder activism.
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False. Some SRI funds use shareholder activism to reform companies, but others just avoid them entirely.
3.
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.
4.
A socially responsible investing fund _______.
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Might own an oil company. Although generally considered to be unfriendly to the environment, an oil company could be held in an environmentally concerned SRI fund if that fund takes a relative approach. That's why it's important to understand how a fund's screens work.
5.
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.