Investing is not just about making money by any means possible. It’s about trying to generate a return by investing in industries that engage in business practices that coincide with your morals and values. I am a big advocate for ethical investing and never invest in any asset that is at odds with my values. I avoid companies that exploit workers or derive their income from sketchy business practices. In keeping with that theme, here are a few investments for the socially responsible investor.
1. Socially Responsible Mutual Funds
Socially responsible mutual funds are a favorite amongst a certain segment of the investing public. Companies like Calvert Investments and Pax World offer mutual funds that invest in companies that do things the right way. They avoid “sin stocks” and companies that make money by questionable means. You never have to worry about and immoral or unethical investment in a socially responsible fund. There are even funds that invest in companies that promote gender equality. Socially responsible funds normally have higher fees than regular mutual funds since fund managers have to devote lots of time to researching ethical investments.
2. Alternative Energy ETF’s
The BP oil spill has illustrated the problem with relying on crude oil for energy. Oil is unfriendly to the environment due to pollution, the potential for oil spills and disasters.. There is also the country’s growing dependence on oil from many foreign sources. Investors that want to invest in alternative energy sources can do so through stocks and ETF’s. ETF’s like the Powershares WilderHill Clean Energy ETF (PBW) or the iShares S&P Global Clean Energy Index (ICLN). Both are a nice way of investing in green energy. Investors that want to get long an individual stock can buy companies like First Solar (FSLR) and Trina Solar (TSL).
3. Socially Responsible ETF’s
If you want to invest in a socially responsible fund but want lower fees than in a traditional fund, take a look at socially responsible ETF’s. Socially Responsible exchange traded funds are hot right now. These ETF’s are on the rise and are only expected to grow in the future. Barclay’s offers the iShares KLD Select Social Index (KLD) which invests in companies that contribute positively to society and the environment. There is also the iShares KLD 400 Social Index Fund (DSI) which tracks the Domini 400 Social Index.
4. Faith Based Investing
You may not have been aware that you can now craft your investment strategy according to your faith. You can now invest based on your convictions. There is a new company called FaithShares funds. FaithShares funds offers a Christian Values Funds, Methodist Fund, and a Catholic Fund. All of these funds avoid investing in companies that derive any income from the alcohol, tobacco, gambling, and pornographic industries. You can sleep easy at night knowing that your investment dollars are going to causes that you support.
5. Community Development Bond Funds
There are also bond funds available for socially responsible investors. Funds like the Community Reinvestment Act Qualified Investment Fund (CRAIX) offer investors consistent bond income while seeking to protect investor capital. This fund invests in debt securities that support the economic development of communities. All investment activities must be in line with the Community Reinvestment Act passed by Congress in the 1977.
Final Thoughts
There are a plethora of investments available to socially conscious investors. Not only can you invest in causes that you believe in but you can make yourself some money as well.
