Socially Responsible Investing!

In this post I'm going to touch upon a topic that I've been getting a lot questions and comments about, which is the topic of 'Socially Responsible Investing'. I'm just going to go through some general points about these types of investments, because it is not a different type of vehicle for investing, just another way OF investing.

We are seeing a big shift in todays world in regards to people becoming more socially and ethically responsible, which is something that is very much needed. As we know, there are a lot of companies out there who are doing an excessive amount of pollution, are not complying with human rights, or are just involved in things that we do not agree with. Traditionally, when we invested in things like mutual funds, we weren't really paying attention to the type of companies we invested in; generally, we were just interested in having our funds grow for our future. However, if we really did our research and looked at some of the companies we were investing in and the type of things they were involved in, we might find ourselves feeling a little 'guilty' or 'uncomfortable' with that. So, whats the solution?

Over the last few years, there's been a big push for the creation of Socially Responsible Investment Funds. These are funds that are focused on investing in companies who meet certain guidelines in regards to how they do business, what type of business they're in, how they affect the environment and so on. Whether its because of religion, personal or moral belief, or any other reason, many people do not want to invest in companies that are involved in certain activities, as it goes against their belief system. Thus, a need for something different!

In 'Socially Responsible Funds', there are strict investment guidelines, and they have exclusion lists. For example, they won't invest in tobacco, or alcohol related companies, or companies that have a poor human rights record, or companies that are involved in weapons manufacturing, etc... Most people invest for their future in things like stocks or mutual funds and the like, however, they also might have a certain belief system which they want to adhere to; so, naturally, this would be a great alternative for them.

As most people don't know that they have a choice, I thought I would share some brief information to let you know there are other options for investing in your future. Typically, these funds work in the same way as regular mutual funds (i.e. investing in companies around the world, expecting growth and income, etc...), but work on a different mandate that is in line with peoples moral/ethical/religious beliefs.

One thing to note is that, generally, the returns on these types of funds MIGHT (not in all cases) be a little lower then a traditional mutual fund. The reason for this is because of the companies that the traditional mutual funds invest in. The fact is, tobacco and alcohol companies (and other types of companies that might not be invested in, in a socially responsible fund), generally have good and more stable returns other companies. However, from the performances that I have seen, these Socially Responsible Funds generally have similar average returns as regular mutual funds.

I hope you've learned something from this post, and if you would like to get more information on these type of funds and the choices available, please do not hesitate to contact me.