Israelsen, Craig L. "Are the Good the Best?" Working Paper, Dept. of Home and Family Living, Brigham Young University. May, 2005.

This study reviews performance of 41 SRI mutual funds (of the 95 identified as 'socially conscious' by Morningstar) for the 12/31/01-12/31/04 time period. The author examines the SRI funds within the 13 Morningstar categories and finds that SRI mutual funds outperformed their unscreened peers in only three (returns are computed on an asset-weighted basis). No risk adjustments are made and no attribution analysis is provided to determine the source of the underperformance.

The author further notes that industries typically avoided by social investors, such as tobacco, alcoholic drinks, and gambling/hotel/casinos, had notably strong performance during this period.

Concludes that "the allegiance of those who manage and invest in portfolios that meet socially responsible mandates clearly transcends raw performance."