Responsible Funds: A New Way To Invest For Impact

responsible-fund

Responsible funds are a type of investment that seeks to generate financial returns while also having a positive impact on society and the environment. These funds typically screen out companies that engage in harmful activities, such as the production of tobacco or weapons, and instead invest in companies that are committed to sustainability and social responsibility.

Responsible investing has become increasingly popular in recent years, as more and more investors are looking for ways to align their financial goals with their values. A 2021 survey by the US SIF Foundation found that $1.7 trillion in assets were invested in responsible funds, up from $1.2 trillion in 2016.

In this blog post, we will discuss the benefits of responsible investing, how to choose a responsible fund, and the different types of responsible funds available.

Benefits of Responsible Investing

There are many benefits to responsible investing.

First, it can help you to feel good about your investments. When you invest in responsible funds, you are investing in companies that are making a positive impact on the world. This can give you peace of mind and make you feel like you are making a difference.

Second, responsible investing can help you to improve your financial returns. Studies have shown that responsible funds can outperform traditional funds over the long term. This is because responsible companies are often more resilient to economic downturns and are better able to adapt to change.

Third, responsible investing can help to create a more sustainable and equitable world. When you invest in responsible funds, you are helping to support companies that are working to address climate change, improve human rights, and protect the environment. This can make the world a better place for everyone.

How to Choose a Responsible Fund

There are a number of factors to consider when choosing a responsible fund. First, you need to decide what type of impact you want to have. Do you want to invest in funds that focus on environmental sustainability, social responsibility, or both?

Once you have decided on your focus, you need to research different funds to find one that aligns with your values. You can use online resources, such as the US SIF Foundation’s website, to compare different funds.

When you are researching funds, be sure to pay attention to the following factors:

  • Fees: Responsible funds typically have higher fees than traditional funds. This is because they require more research and due diligence. However, the higher fees are often offset by the potential for higher returns.
  • Investment style: Responsible funds can be either actively managed or passively managed. Actively managed funds have a portfolio manager who selects individual stocks and bonds. Passively managed funds track an index, such as the S&P 500.
  • Performance: Responsible funds have a wide range of performance. Some funds have outperformed the market, while others have underperformed. It is important to do your research and choose a fund with a track record that meets your expectations.
responsible-funds
Responsible Funds: A New Way To Invest For Impact

Types of Responsible Funds

There are a number of different types of responsible funds available. Some of the most common types include:

  • Socially responsible funds: These funds invest in companies that meet certain social criteria, such as good corporate governance, fair labor practices, and environmental sustainability.
  • Environmentally responsible funds: These funds invest in companies that are working to reduce their environmental impact.
  • Sustainable funds: These funds invest in companies that are committed to long-term sustainability.

Conclusion

Responsible investing is a growing trend that offers a number of benefits. If you are looking for a way to align your financial goals with your values, responsible investing may be a good option for you.

There are a number of different responsible funds available, so you can choose one that meets your specific needs. Be sure to do your research and choose a fund with a track record that meets your expectations.

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