The interest in ethical mutual funds has experienced a strong upsurge in Sweden over the last years, and the market for ethical funds has grown to include a total of 59 funds. However, the amount actually invested in ethical funds falls short of the expectations; only 1.5 percent of the total assets invested in mutual funds are placed in ethical funds while some 60 percent of the Swedish people claim that they consider ethics an important issue when choosing which funds to invest in. People seem to be uncertain whether it is possible to combine an optimal rate of return with ethical considerations or not, and this uncertainty could be one reason why people are deterred from investing in ethical funds. The objective of the thesis is therefore to analyse if the performance of Swedish ethical mutual funds differs from the average return of the market, thereby making it easier for savers to make an investment decision based upon valid information rather than preconceived ideas. Out of the total 59 Swedish ethical mutual funds nine funds were selected, which all apply a strict type of ethical screening that corresponds well to the general view of ethics among the Swedish people. To evaluate the performance of the ethical funds in the sample, three riskadjuste
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