The ethical index FTSE4Good Ibex as an alternative for passive portfolio strategies in Spain

Abstract

This paper compares the return obtained by two of the most important stock indices in Spain: the conventional index IBEX 35 and the ethical index FTSE4Good Ibex. The aim of the study is to check whether the screening process to select only socially responsible companies has a negative impact on the return by the ethical index. The results show that this is not the case, as the correlation between both indices is very high. This high correlation is due to the fact that both indices are composed by almost the same companies. This outcome releases the question of what could be the purpose of an ethical index which is so similar to the conventional one, even regarding companies' selection.

Keywords

• ethical investment
• stock index
• corporate social responsibility
• diversification