Herding Within Socially Responsible Investments

Abstract

Socially responsible investing has become a new form of investor strategies within the last decade. Its prominence within the investment community has been growing substantially whilst general strategies have been sluggish. Socially responsible investing represented around 11% of all funds under professional management. The paper examines some determinants of socially responsible investment returns, being market factors, momentum, capital flows and consumer opinions. The existence of herding behaviour, through momentum, was found to be strongly significant in explaining returns of ethical investments.