Ethical funds have historically been priced more expensively than other funds, and are still perceived to give investors lower returns. But many fund managers argue that, according to models of share pricing, there is no reason why these investments should under-perform. In fact, several ethical funds have been achieving respectable returns.
Not surprisingly, the capital asset pricing model and arbitrage pricing theory do not mention ethics. But the question is whether they proscribe ethics; it seems either they don’t at all or only negligibly.
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