So-called socially responsible funds may actually be higher risk than their plain vanilla brethren. According to the firm Audit Integrity, if you take two socially responsible funds as an example it appears that their 'socially responsible' holdings contain companies who practice some pretty risky companies from an aggressive accounting or corporate governance perspective.
For the Domini Social Equity Fund and the FTSE KLD 400 Social Index, 50% of their holdings have been ranked as 'Very Aggressive' by Audit Integrity's metrics, as shown below.
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