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Socially responsible stock funds in Brazil

Dimas Hartz Pinto (The Coppead Graduate School of Business, Federal University of Rio de Janeiro, Rio de Janeiro, Brazil)
Celso Funcia Lemme (The Coppead Graduate School of Business, Federal University of Rio de Janeiro, Rio de Janeiro, Brazil)
Ricardo Pereira Câmara Leal (The Coppead Graduate School of Business, Federal University of Rio de Janeiro, Rio de Janeiro, Brazil)

International Journal of Managerial Finance

ISSN: 1743-9132

Article publication date: 26 August 2014

757

Abstract

Purpose

The purpose of this paper is to examine the risk-adjusted performance of Brazilian SRI stock funds.

Design/methodology/approach

Risk-adjusted performance of 11 Brazilian socially responsible investment (SRI) funds relative to local index funds and matched pairs of funds.

Findings

SRI funds performed as well as portfolios representing the broad market on a risk-adjusted basis, both before and during the global financial crisis. Independent investment houses are not interested in SRI funds. Large financial conglomerates may see these funds as part of their corporate social responsibility image strategy.

Research limitations/implications

Brazilian SRI funds are a very small niche in the stock mutual fund universe of the country, thus, the small sample (universe) of SRI funds, as far as the author's knew. One cannot say that independent asset managers do not include SRI screening in their stock selection criteria. The use of SRI screening by the most prominent independent asset managers is a potential topic for future research.

Practical implications

Brazilian SRI funds did not represent an extra screening filter cost to their investors. The majority of asset managers do not consider this strategy important enough to deserve an exclusive vehicle.

Social implications

As SRI funds did not posit an extra screening cost, they may deserve a greater share of the mutual fund market, stimulating more SRI.

Originality/value

The performance of Brazilian SRI stock funds had not been examined in the international literature. Brazil has vast natural resources, a very large economy and the fourth largest mutual fund industry in the world, but was overlooked.

Keywords

Citation

Hartz Pinto, D., Funcia Lemme, C. and Pereira Câmara Leal, R. (2014), "Socially responsible stock funds in Brazil", International Journal of Managerial Finance, Vol. 10 No. 4, pp. 432-441. https://doi.org/10.1108/IJMF-10-2013-0107

Publisher

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Emerald Group Publishing Limited

Copyright © 2014, Emerald Group Publishing Limited

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