From
Your Perspective:
Socially responsible mutual funds
What is socially responsible investing?
Socially responsible investing generates sometimes contentious debate. Some people consider the label judgmental — suggesting that all other types of investing are "socially irresponsible." Others say that the term is used so broadly, to encompass so many points of view, that it is meaningless. And still others claim that stressing behavior rather than the bottom line is not sound financial strategy. But those that support socially responsible investing are committed to it.
Proponents of environmentally responsible investing, for example, say that supporting companies whose policies are good for the earth is good business as well as good social policy. Likewise, people who choose funds that invest in line with specific religious precepts say it's their moral responsibility to align their money and their beliefs.
However you look at it, socially responsible (SR) funds are becoming more competitive and mainstream. That means most investors can increasingly find funds that fit their value systems while helping them meet financial goals. Since the mid-1990s, money has flowed into SR investments at a faster rate than into conventional managed investments. As a group, SR funds perform almost as well as U.S.
stock
funds as a whole. And some of the top SR funds consistently outperform their
benchmarks.
Fact or Fiction Today, there is almost as much diversity among SR funds as among mutual funds in general. In addition to a wide variety of social, ethical, and religious criteria, there are SR funds to fit a range of investing strategies and styles, including
growth,
income,
index,
balanced, and
international
funds. However, the vast majority of the roughly 200 alternatives are
equity funds.
