RT Journal Article
SR Electronic
T1 The Cost of Socially Responsible Investing
JF The Journal of Portfolio Management
FD Institutional Investor Journals
SP 52
OP 56
DO 10.3905/JPM.2008.35.1.52
VO 35
IS 1
A1 Timothy Adler
A1 Mark Kritzman
YR 2008
UL https://pm-research.com/content/35/1/52.abstract
AB In this article, the authors estimate the cost of practicing socially responsible investing. Using these results, investors may determine whether imposing restrictions on the available investment universe is the most cost-efficient method for promoting the particular social ideal. The authors design and execute a Monte Carlo simulation to compare the performance of a skillful investor in an unrestricted investment universe with the performance of the same investor in a restricted investment universe. They repeat this for a variety of skill levels and investment universes and find that the cost of socially responsible investing is substantial for even moderately skilled investors.TOPICS: ESG investing, accounting and ratio analysis, in markets