SRI Funds: Nomen est Omen

We test the frequently made claim that SRI funds are conventionalfunds in disguise. For this purpose, we compare the portfolio holdings ofSRI funds to conventional funds concerning their social and environmentalstandards. Our empirical study of US equity funds shows that SRI fundshave a significantly higher ethical ranking than standard funds, i.e., theyare not conventional funds in disguise. This result holds for all ethicalcriteria we investigate. It is stable over time and holds after controlling forseveral fund characteristics. Finally, we find no evidence that our result isgenerated by window dressing strategies of SRI funds