From
Your Perspective:
Socially responsible mutual funds
Socially responsible mutual funds
While most investors look at fees, past performance, and investment objectives when selecting mutual funds for their
portfolios,
some also want to know about the actions and attitudes of the companies that are the fund's underlying investments. Socially responsible
mutual funds
— also known as green funds, social funds, values-based funds, and mission funds, to mention just a few of the names they go by — are designed for investors who want to align their portfolios with their religious, political, or social convictions.
Since opinions differ on what makes a company responsible or an investment acceptable, socially responsible funds are as diverse as the investors they attract. In fact, there are funds that take opposing positions on certain controversial issues. For example, some funds refuse to invest in companies that provide healthcare and other benefits to unmarried domestic partners, while other funds seek out firms that offer those benefits. Similarly, some funds refuse to invest in companies that test products on animals, while other funds don't consider testing an issue.
Despite their differences, what all socially responsible funds have in common is a commitment to aligning their investment portfolios with specific goals, and using the combined capital of their investors as leverage to effect corporate change.
Historical fund-making Pax World Fund, the first widely held socially responsible mutual fund, was started in 1971 by two Methodist ministers, Luther Tyson and Jack Corbett. The fund excludes war, alcohol, tobacco, and gambling-related businesses, seeks those with strong environmental and fair employment practices, and has been a leader in promoting shareholder activism.
