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THE ETHICAL AND NON ETHICAL FUNDS: AN AGECOHORT ANALYSIS

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The data collected on www.morningstar.com and based on 109 ethical funds and 110 ... responsible, then you can say that the ethical finance won partially his bet ... – PowerPoint PPT presentation

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Title: THE ETHICAL AND NON ETHICAL FUNDS: AN AGECOHORT ANALYSIS


1
THE ETHICAL AND NON ETHICAL FUNDS AN AGE-COHORT
ANALYSIS
Global Conference on Business and Finance - Costa
Rica 2009
  • Angela Coscarelli, Domenica Federico, Antonella
    Notte
  • University of Calabria - Italy

2
Overview
Global Conference on Business and Finance - Costa
Rica 2009
  • Introduction
  • The ethical mutual funds market
  • The data
  • The age-cohort analysis
  • The empirical results
  • Conclusions

3
Research questions
Global Conference on Business and Finance - Costa
Rica 2009
  • What are the characteristics of the ethical and
    non ethical mutual funds under Italian and abroad
    law?
  • What are the different development between the
    ethical and non ethical mutual funds?

4
Objective
Global Conference on Business and Finance - Costa
Rica 2009
  • To highlight some characteristics of the funds
    such as typology, assets, performance,
    geographical area of location, investments
    selecting criteria
  • To put in evidence the performances of the
    age-cohort of funds in the period 1980-2008

5
Introduction
Global Conference on Business and Finance - Costa
Rica 2009
  • The ethically-oriented finance is based on the
    assumption that operators of the financial sector
    use as a benchmark the ability of the investment
    to produce social and environmental benefits
  • The change of behavior in a more social sense
    should fund all those businesses that produce
    social and environmental benefits, leading thus
    to a greater corporate crisis prevention and to a
    development of a sustainable economy
    (Capriglione, 1997 Rothschild, 1993 Sen, 1986
    Signori et al., 2005)
  • It is important review the international markets
    guidance financial intermediaries, such as
    banks, the mutual funds and the financial
    institutions, promote the ethical portfolio
    selection through the ethical funds

6
The ethical mutual funds market
Global Conference on Business and Finance - Costa
Rica 2009
  • The ethical mutual funds have grown significantly
    over the past two decades
  • According to Eurosif research (Eurosif, 2008)
  • in Europe the total asset under management has
    reached 2.665 trillion of euros in 2007. This
    total amount is made up of 511.7 billion of euro
    for Core SRI and 2.154 trillion of euros for
    Broad SRI in 2007
  • in Italy the ethical funds are still a small
    portion of total assets under management. The
    Core SRI accounts for about 3.4 billion of euros,
    which means 0.32 of total assets under
    management to national level. The Broad SRI has
    increased remarkably from 0.09 billion of euros
    in 2005 to 240 billion of euros in 2007

7
The data
Global Conference on Business and Finance - Costa
Rica 2009
  • The data collected on www.morningstar.com and
    based on 109 ethical funds and 110 unethical funds

The pyramid of the mutual funds
8
The categories of the mutual funds
Global Conference on Business and Finance - Costa
Rica 2009
9
The performance of the mutual funds
Global Conference on Business and Finance - Costa
Rica 2009
10
The age-cohort analysis
Global Conference on Business and Finance - Costa
Rica 2009
The study is developed through a cohort analysis
to put in evidence the performances of the cohort
of funds in the period 1980-2008
The age-cohort of the ethical funds
The age-cohort of the non ethical funds
11
The empirical results
Global Conference on Business and Finance - Costa
Rica 2009
The ethical funds are characterized by a negative
value respects to the non ethical funds
The performance of the non ethical funds cohorts
The performance of the ethical funds cohorts
12
Conclusions
Global Conference on Business and Finance - Costa
Rica 2009
  • The ethical funds should represent an attempt to
    replace the use of money to the social relations
  • The creation of socially responsible securities
    portfolios implies recognition of the efforts
    deployed by the best companies in terms of human
    rights respect and total lack of involvement in
    illegal activities.
  • The socially responsible finance could then
    activate a virtuous cycle that can produce
    benefits for individual stakeholders and for
    society suggesting, moreover, a particular
    pattern of behavior that precludes the easy
    profit and the absence of values
  • If the ethical funds continue to outperform the
    traditional investment instruments in the future
    years, showing an increase in the number and
    underwriters of socially responsible, then you
    can say that the ethical finance won partially
    his bet
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