Journal of Business Ethics

, Volume 81, Issue 2, pp 247–260 | Cite as

Performance of Ethical Mutual Funds in Spain: Sacrifice or Premium?

  • Angeles Fernandez-Izquierdo
  • Juan Carlos Matallin-Saez


There is currently much debate in the economic literature about whether ethical investment involves a financial sacrifice or premium. One of the most common methods of testing this compares the financial performance of ethical investment funds with that of other funds not considered “socially responsible” or ethical. The majority of these research studies evaluate the performance of the ethical funds according to classic measures, whereby different financial markets, in different countries and for different periods of time serve as reference for evaluation. The ultimate conclusion of all of these studies is that there are no significant differences between the performance results of one type of funds and the other. In Spain, ethical investment funds are still an incipient sector of investment. To date, the Spanish market has not been included in any type of analysis of these characteristics. Therefore the main objective of this article is to compare the financial performance of ethical investment funds to that of other funds in the Spanish retail market. We propose the aggregate type of analysis as the Spanish ethical investment funds have experienced a weaker development in comparison to those of other developed countries. In the first step we suggest the financial performance to be compared by style analysis since the asset distribution of the Spanish Social Return Investment (SRI) funds differs from the European trend. In particular, we use the multifactor regression model with style benchmarks. We found that their financial performance is in all cases superior or similar to that achieved by the rest of the funds. In the second step, to achieve a more robust and homogeneous comparison, we used the bootstrap method, comparing ethical and non-ethical fund subsamples by homogeneous groups. No significant differences between these two types of funds have been found. Thus, if we assume the positive o neutral effect of ethical investment on investor utility in the retail Spanish market the financial and social performance (FSP) of ethical funds will be, in aggregate, superior to the FSP achieved by conventional funds. In conclusion, the financial performance of ethical mutual funds in Spain is no sacrifice.


ethical investment mutual funds financial performance style analysis bootstrap method 


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This study is part of the research projects SEC2003-07899 of the Ministerio de Ciencia y Tecnologia and P1-1B2006-16 by Universitat Jaumel-Fundación Bancaixa-Castelló and GV/2007/097 by Generalitat Valencia. The authors wish to thank the editors of the magazine as well as two anonymous reviewers for the comments and suggestions on the manuscript. Our thanks are due to the Public Relations department of the CNMV (Spanish Securities and Markets Commission), AFI (International Financial Analysts) and MSCI (Morgan Stanley Capital International) for making their data available.


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Copyright information

© Springer Science+Business Media B.V. 2007

Authors and Affiliations

  • Angeles Fernandez-Izquierdo
    • 1
  • Juan Carlos Matallin-Saez
    • 1
  1. 1.Dpto. de Finanzas y Contabilidad Universitat Jaume ICastellónSpain

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