Returns on Sustainable Mutual Funds in India

Jain, Anant (2011) Returns on Sustainable Mutual Funds in India. [Dissertation (University of Nottingham only)] (Unpublished)

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The world has seen a huge growth in investment through the sustainable sector. But the study on the cost in construction and measuring the performance of such investments is confined to the limited countries. Thus to compare the performance of the sustainable investment with that of traditional investments it is necessary to increase the sample size of the study. Considering this in mind the paper aims to study the performance and risk of the sustainable mutual fund investments with that of traditional mutual funds in Indian market. This is been done by constructing a portfolio of ethical funds and the traditional mutual funds, taking into consideration the highest Sharpe ratio. The performance of the SRI mutual fund is been compared with that of conventional mutual fund with the help of Jensen’s alpha. This test are further checked with the help of three factor model as used by Baure, R.; Derwall, J. and Otten, R. (2006) etc. In our study we also try to see what the main problems that doesn’t allow the ethical investor to become the mainstream investor.

The empirical evidence shows that the SRI funds which are created by screening the mutual funds from the large universe of the mutual fund do not generate statically excess return and thus their performance does not differ statically from that of the conventional mutual fund. The evidence from the Indian SRI market coincides with that of other studies made in different countries. It was also observed that the main problem that stood in front of the investor while investing ethically in the developing economies was the lack of knowledge, trust and the existing mindset of the investor. The lack of proper management and disclosure system also hindered the growth of the SRI in these countries. But with the growing popularity of SRI and increasing pressure of implementing the ESG factors in decision making, the SRI industry is picking up pace in these countries and it’s a matter of time that the ethical investment in these countries would be as big as those in the western countries.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 25 Apr 2012 14:14
Last Modified: 16 Dec 2017 02:22

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