How to Find a Socially Responsible Mutual Fund

You've decided you want to invest in mutual funds, but you want to make sure your money isn't supporting something you politically or socially objectionable. Happily, socially responsible investing has become easier in recent years. With a little research, you can find a mutual fund that matches your investment needs.

Instructions

Difficulty: Moderate

1. Understand your needs before you seek out mutual funds. Knowing both how much risk you can afford and how much money you can afford to invest will give you the information you need to select the fund that is right for your wallet.
2. List out your values. At this point, just think about what's important to you, not necessarily what you will find in a socially responsible mutual fund. Think about your ideas on social issues, morality, the environment, animals, workers and human rights as a whole.
3. Decide which of your values are requirements and which would just be nice to have represented in your investment choices.
4. Examine screening categories. Mutual funds can be screened for such issues as animal testing, environmental practices, participation in the defense/weapons industry, community investment, human rights and other important issues. Note that there are both positive and negative screens.
5. Understand mutual fund screens. The basic screens are no investment, positive investment and restricted investment. With a no investment screen, the fund does not invest in a company participating in certain practices, such as animal testing. A positive investment screen indicates that a fund will invest in a company with positive practices, such as community development. A fund with a restricted investment screen places some limits on investments in companies participating in certain practices, such as holding a poor environmental record.
6. Research socially responsible mutual funds to locate one that meets your financial needs and your values. The Social Investment Forum provides a list of screened socially responsible mutual funds and gives information about both screens and performance.
7. Choose the fund that meets both your financial requirements and the requirements of your heart. Invest with a clear conscience!

Tips & Warnings

• Discuss your investment choice with a broker if you have any questions about it.