ABSTRACT
Socially responsible investing is a growing investment philosophy that has gained profound interest in both the local and international context. Socially conscious investors are seeking alternative ways to make more responsible investment choices, especially since the Covid-19 pandemic. Although financial markets experienced a significant decrease owing to the pandemic, a more positive outcome was eminent by an increased demand in SRI products during this period. The aim of this study was to evaluate the performance of local SRI funds before, during and after the Covid-19 period. Comparatively evaluating the performance relative to the FTSE/JSE Responsible Investment Index and All Share Index, will assist investors (those with a heightened desire to invest responsibly) to establish if SRI funds were able to provide higher risk-adjusted returns than the comparable SRI and general equity markets. The results indicated that although larger returns were produced by SRI funds during the Covid-19 period and that significant differences were found relative to the two indices, SRI funds were not able to consistently outperform either index. Thus, socially conscious investors are likely to achieve higher risk-adjusted returns from the SRI index, although not receiving diversification benefits from investing in funds.
ABSTRACT
Investors are constantly searching for methods to generate value above passive investment techniques. Therefore, analysing the performance of hedge funds as compared to mutual funds, particularly in the wake of Covid-19, can aid investors in their investment decision-making process. Those investors who desire above-average returns, particularly in volatile market conditions place an expectation on hedge funds to be able to achieve higher performance during economic downturns, given that they are designed to mitigate risk and to take advantage of harsh financial market conditions. Monthly, secondary data were collected from 30 September 2018 to 31 August 2021 to analyse and compare the risk-adjusted performance of five hedge funds and five mutual funds in South Africa. Both hedge and mutual funds indicated higher risk-adjusted returns from the pre-Covid-19 period compared to during the pandemic. Hedge funds were found to have higher risk-adjusted returns than mutual funds during the Covid-19 period. The novelty of these results indicated that hedge fund managers can achieve higher returns for investors during extreme market events.