What Counts in Social Managed Investments: Evidence from an International Survey

Despite speculation from legislators and practitioners, no studies have investigated the reasons for social funds' marginal market penetration. More generally, calls for a greater understanding of investors' motivations, needs and purchasing intentions have not been met. By identifying what attracts consumers to social mutual funds and the information-processing difficulties consumers face when considering a purchase, this paper claims to make a meaningful contribution to the literature on social investment and mutual funds. In 2004 an Internet questionnaire survey attracted 382 interested, current and former social investors from Australasia, North America and Europe. The questionnaire measured motivations to invest in social funds and attitudes towards information sources and selection criteria. A restricted data set was used to test a set of propositions relating to respondents' investment intentions and information asymmetries. Results were largely as expected. Respondents were attracted to social funds from moral conviction and from desires to influence corporate behavior. One in two respondents had chosen not to invest on the basis of informational concerns. Unexpectedly, social investment styles, portfolio listings and perceived accuracy of information were considered more important to an investment decision than management expenses. Findings underline a need for careful product design and management.