What Is An Ethical Investment Fund?
More people than ever want to invest their money the ethical way. Sales of ethical funds totalled 98 million in the second quarter of 2010, according to the Investment Management Association. But what counts as ethical investing?
An ethical fund is an investment vehicle that looks to invest in businesses with a social, moral or environmentally responsible agenda. Each fund has its own rules about what type of company it will and will not invest in.
Is an fund the same as a socially responsible investment (SRI) fund?
SRI funds take a slightly more liberal approach to investing than ethical funds. An ethical fund might not invest in a company which practices animal testing whereas an SRI fund might, but only if the testing is for life-saving medicines and not cosmetics.
What's the difference between a light green and dark green fund?
Ethical and SRI funds are measured in shades of green. A dark green fund will have strict ethical, moral or environmental standards when choosing stocks to invest in while a light green fund will use far more relaxed criteria.
What is positive and negative screening?
Both ethical and SRI funds will screen companies before deciding to invest in them. An SRI fund usually combines negative and positive criteria. It will select both companies that it considers do good, as well as those that might not instantly stand out as being 100% ethical.
Ethical funds tend to work only on negative selection they will usually exclude firms that take part in unethical activities, such as gambling, making or selling arms or tobacco. They only invest in areas that fulfil the particular investment company's own ethical standards.
Do ethical funds make less money than non-ethical ones?
There is no reason why an ethical fund should not make a good profit. Investing in timber,for example, has consistently outperformed bonds, commodities and stocks.
How do you trust that a fund is ethical?
Its best to look at what the funds top 10 investments are, and what percentage of its portfolio is held in ethical stock. If you wouldnt be happy to do business with any of these companies then it would be best to look for a fund which matches your own ethics better.
An ethical fund is an investment vehicle that looks to invest in businesses with a social, moral or environmentally responsible agenda. Each fund has its own rules about what type of company it will and will not invest in.
Is an fund the same as a socially responsible investment (SRI) fund?
SRI funds take a slightly more liberal approach to investing than ethical funds. An ethical fund might not invest in a company which practices animal testing whereas an SRI fund might, but only if the testing is for life-saving medicines and not cosmetics.
What's the difference between a light green and dark green fund?
Ethical and SRI funds are measured in shades of green. A dark green fund will have strict ethical, moral or environmental standards when choosing stocks to invest in while a light green fund will use far more relaxed criteria.
What is positive and negative screening?
Both ethical and SRI funds will screen companies before deciding to invest in them. An SRI fund usually combines negative and positive criteria. It will select both companies that it considers do good, as well as those that might not instantly stand out as being 100% ethical.
Ethical funds tend to work only on negative selection they will usually exclude firms that take part in unethical activities, such as gambling, making or selling arms or tobacco. They only invest in areas that fulfil the particular investment company's own ethical standards.
Do ethical funds make less money than non-ethical ones?
There is no reason why an ethical fund should not make a good profit. Investing in timber,for example, has consistently outperformed bonds, commodities and stocks.
How do you trust that a fund is ethical?
Its best to look at what the funds top 10 investments are, and what percentage of its portfolio is held in ethical stock. If you wouldnt be happy to do business with any of these companies then it would be best to look for a fund which matches your own ethics better.