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Part I of this Article defines social investing and briefly reviews the South Africa divestment movement which has brought questions about the legality of social investing to the fore. Part II comments upon existing statutory and common law limitations on the discretion of trustee-investors to adopt policies of social investing. Part III analyzes the empirical research on the extent to which preclusion of a set of investment opportunities may impair the performance of a typical trustee-investor's portfolio, both with respect to rate of return and risk. Part IV explores the implications of the empirical evidence analyzed in Part III for the legal standards surveyed in Part II. We conclude that it is neither necessary nor appropriate to apply the legal standards limiting fiduciary discretion so as to prohibit social investing strategies no more restrictive than one requiring divestment of all stocks held in any company doing business in South Africa.



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