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Do political values influence investing? The authors answer this question using data on the political contributions and stock holdings of US investment managers. They find that mutual fund managers who make campaign donations to Democrats hold less of their portfolios (relative to non-donors or Republican donors) in industries that are deemed socially irresponsible (e.g. tobacco, guns and defense, natural resources). Although a higher fraction of Democrat-run mutual funds are Socially Responsible (SRI), this result holds for non-SRI funds and after controlling for other fund and manager characteristics. The effect is more than one-half of the under-weighting observed for SRI funds.
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