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Funds 304: Socially Responsible Investing Funds

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1.
A socially responsible investing fund might engage in shareholder activism within companies it owns because _______.
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It wants to change policies it disagrees with. A perfectly ethical company is a rarity; thus, a SRI fund might use activism to mold its companies to its wishes.
2.
Socially responsible funds _______.
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May screen companies on different values; there's no one SRI approach. Although most SRI funds shun tobacco, alcohol, and nuclear-weapons manufacturers, they can screen on dozens of different criteria. There's no single approach.
3.
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.
4.
Because of their ethical criteria, socially responsible funds outperform the average mutual fund.
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False. The results are not uniform. While some funds do outperform the average, there are many that either match it or do worse.
5.
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.