Ethical Standards in Mutual Funds

The role of ethics in finance is an issue with past origins that has begun to take on greater significance. Investors are showing great interest in financial instruments that display ethical criteria within their structure and operation. Financial instruments with ethical standards, even while adopting the principles of efficiency, shun short-term logic and display their ability to be stabilizing, representing to those investors who depend on them a long-term security. Particularly, mutual funds pursuing ethical standards represent an important sign of the restoration and reaffirmation of ethical and social values by the financial world. Mutual funds, besides setting their financial objectives, pursue a goal of a more social nature with investments established on the premise of transparency, trust, and social responsibility. With ethical standards, mutual funds reduce conflicts of interest and succeed, proving to be closest to the theoretical model of the allocative efficiency of the financial markets.