Socially Responsible Investing

by Kristina on September 17, 2010 · 4 comments

During the past few weeks we have discussed charity donations, volunteering, as well as our banks philanthropic effortsDINKs, I ask you…are you a socially responsible investor?

Are you green? Do you recycle? Do you use eco friendly materials? A new investment trend on the market is Socially Responsible Mutual Funds.  When I refer to Socially Responsible Mutual Funds as a new investment trend, I don’t mean that it is a new investment concept.  I am simply observing that it is starting to reach out to the masses.

Socially Responsible or Socially Savvy Mutual Funds invest in eco friendly companies or companies that pledge to maintain sustainability in sectors such as climate change.  They don’t invest in companies that are considered to be harmful such as alcohol and tobacco companies.

Some examples of Socially Responsible Mutual Funds are as follows:

  • The TD Global Sustainability fund seeks “to achieve long-term capital appreciation by investing primarily in equity securities of companies around the globe, that are viewed as contributing to the world’s future sustainability.
  • The Alger Green Fund normally invests at least 80% of assets in equity securities of companies of any market capitalization that, in the opinion of the management, conduct businesses in a socially responsible manner.  They consider Apple Inc., Wal-Mart Stores, Microsoft Corporation, and Google to be socially responsible, as they are listed in the funds Top Ten Holdings.
  • The Neuberger Berman Socially Responsive Mutual Fund claims to be “one of the world’s first socially responsive mutual funds”.  It is an average risk fund with a higher than average historical rate of return, according to the fund profile.  The Top Ten Holdings include the Washington Post Company, Yahoo Inc., and 3M Company.  The Top Three Sector Investments are Information Technology, Industrials, and Energy.

Does your personal opinion affect the way you invest?

Everyone has their own investing strategy. Maybe Socially Responsible Mutual Funds are a good fit for your investment portfolio.  But, on the other hand, maybe they aren’t.  If you are considering adding a new mutual fund to your investment portfolio it is a good idea to track the fund’s performance, as well as do a little bit of research before investing.

Yahoo! Finance is a great resource to obtain information on Mutual Funds and Stocks including the current selling price as well as past performance.  This is a free service and it is available to everyone.

Morningstar is the widely adapted Mutual Fund rating system.  They are a non biased third party that rates and evaluates all Mutual Funds.  Morningstar rates Mutual Funds on a star system according to past performance, volatility, and distributions (among other criteria).  Five stars is the best rating, and 1 star is a poor rating.  If you would like detailed information about a Mutual Fund as well as a third party opinion then Morningstar may be a great service for you.  You can register with Morningstar for free, or you can subscribe to their Premium membership for a fee.

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{ 3 comments… read them below or add one }

1 Tim September 17, 2010 at 10:19 pm

define socially responsible.

2 Kristina September 18, 2010 at 10:32 pm

In my own personal opinion Socially Responsible Investing means investing in companies that do not promote services or embrace lifestyles that are considered to be harmful or unethical by the masses. Companies like this include alcohol and tobacco companies, non-eco friendly companies, or companies that use child labour. Every Mutual Fund Manager has their own investment strategy, and their own views on what defines Socially Responsible.

3 Tim September 19, 2010 at 12:14 am

every company which sells a viable good or service is therefore providing a social good, thus is “socially responsible”. If there wasn’t a desire for the good or service, then they would have no social responsibility. I have yet to see a company meet a definition of eco friendliness and to what extent. Child labor at what age are we talking about? Children are allowed to work in the US at a certain age. In most of the world children work, and without their work families would not be sustainable. alcohol is socially accepted in masses in just about most of the world, and the livelihoods of more than one employee depend on that socially acceptable responsibility.

apple parts its gadgets out to not so socially responsible countries like china, yet apple is considered a socially responsible company (shhhhh).

some of those hybrids are pretty good on what people view as socially responsible eco-friendliness, but i’m sure those strip mines getting the cobalt and other heavy metals to make those eco friendly batteries in conflict fighting countries is socially responsible (shhhhh).

just two examples, but we seem to bias our socially acceptableness scale towards what we feel is socially responsible, and ignore the other aspects (shhh).

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