The Impact of Faith-Based Screens on Investment Performance

Abstract

There has been a phenomenal rise in faith-based investing in recent years. A very important question arises: do investors sacrifice satisfactory economic returns by making ethically and socially responsible investing decisions based on their faith? Using data on 36 faith-based mutual funds, this article reviews and extends previous research on the performance of faith-based investing. It examines the performance of these faith-based funds over three different five-year periods from May 2001 to February 2008. By applying a comprehensive set of tests, the authors find evidence that faith-based funds mostly outperform the market. The results also suggest that faith-based funds do better than socially responsible investing funds in general.