Background: There has been an increase in savings and investment in recent years along with an increased interest in responsible investments. Ethical mutual funds has developed and gained increasingly popularity.

Aim: The aim of the study is to examine if ethical mutual funds are an equivalent alternative to traditional mutual funds in terms of return, risk and risk-adjusted return on the Swedish stock market.

Theory: Beta, Jensen's Alpha, Sharpe ratio, Treynor ratio, and Modern Portfolio Theory.

Method: Quantitative survey method, a statistical study.

Conclusion:The study concludes that there is no significant difference between ethical and conventional mutual funds in terms of return, risk and risk-adjusted return. The small differences that exist between the two fund groups are in favor of the ethical fund group, indicating that funds is a comparable investment option compared to traditional mutual funds.