Social Responsibility & Mutual Funds
Investing in a mutual fund was previously never viewed as a way to make a legitimate difference in the world. With the advent of socially responsible mutual funds this has changed, and the average investor can choose to put money into causes that she believes in. It is now possible to make a difference in a return on investment at the same time.
Other People Are Reading
-
Function
-
The purpose of the socially responsible mutual fund is to provide a vehicle in which investors can put money into, and earn a return on, socially responsible investments. This type of mutual fund uses its funds to invest in companies that are considered to be socially responsible in one way or another. The companies that comprise this type of fund could be alternative energy companies, companies that put an emphasis on helping the environment or some other similar company.
Significance
-
This type of mutual fund has become very popular in the market with a growing emphasis on protecting the environment. Many people are no longer content with generating returns on their investment if it means investing in companies whose policies they do not agree with. With socially responsible mutual funds, they now have an alternative to this method. With governments and special groups putting an emphasis on protecting the environment and helping others, these funds have found plenty of support in the investment community.
-
Choosing a Fund
-
There are several socially responsible people funds that you could choose to invest in. When choosing a fund, it is important to look at all of the aspects that you would normally look at when choosing a fund. The annual return, the investment manager and the expense ratio are all still important factors to look at. You will most likely also want to look at the investment strategy to see exactly what type of socially responsible investment you will be getting involved with.
Impact
-
When this type of fund was originally created, many questioned whether it would actually be able to make a difference in the world. Now that these funds have been in the market place for some time, it is apparent that they really can make a difference. Corporations want their stock prices to remain high. This can happen when mutual funds are willing to invest in them. Companies then have an incentive to engage in socially responsible practices so that they can attract more investors from these funds.
Considerations
-
Socially responsible investment funds can provide you with a mechanism to help others and the planet while also increasing your account balance. While these are considered to be a worthy type of investment, you most likely should not create an entire portfolio around them. These funds can make up a percentage of your portfolio, but you should still try to create a balanced portfolio of different asset classes. You may want to invest in some socially responsible stocks and bonds in addition to the mutual funds.
-
References
- Photo Credit Dynamic Graphics/Dynamic Graphics Group/Getty Images
