Do Socially-Responsible Mutual Funds Perform Better Than Conventional Research Paper

Do Socially-Responsible Mutual Funds Perform Better Than Conventional Mutual Funds - Research Paper Example Center of discussion in this paper mutual fund as a business which puts in funds in a branched out assortment of securities. The individuals purchasing a share or portion of the fund are considered to be the shareholders or owners. The investments made by these numerous individuals help the mutual fund company to acquire securities like bonds as well as stocks. The means of making money by a particular mutual fund from the securities that it invested in could be in two dissimilar approaches. Firstly, the mutual fund company could collect the interest or dividends paid on the security or secondly, the particular security could also increase in value. There also exist probabilities of losing money or experience a dip in value by a fund. Mutual funds could be classified into three usual kinds and they are the stock or equity, money and bond market. The stock funds refer to those which put in its funds principally in stocks that are issued by foreign or U.S. companies. The bond funds ref er to those funds which principally invest in bonds. And the money market funds are the ones that chiefly make their investments in securities for the short-term. These securities are those that are made available in the market by the government and even its own agencies in the US, local as well as state governments and US corporations. It needs to be mentioned in this context that there exists two different kinds of mutual funds and they are the socially-responsible ones and the other is the conventional or the traditional one. The socially-responsible funds involve certain decisive factors while making investments in companies. However, the traditional ones just take into concern the prospects and financial performance of the companies along with other relevant factors while investing (Statman, 2000). The process of selecting the right kind of investments takes a lot of expertise even in perfect market conditions. Along with choosing the appropriate investment there comes the nece ssity of keeping an eye on those investments made. Mutual funds