Socially responsible funds are investments that have two major goals in sight, one is to maximize the returns and the other one is to meet some social goals. The goals are mostly focused on the environment, human rights protection as well as consumer protection. Many of the companies that issue these funds avoid doing business with alcohol, tobacco, weapons and gambling related companies.
Socially responsible funds have a long history, one that dates back to the late 1750s, during the pioneering of the Religious Society of Friends. Religious institutions played a key role in helping establish the funds, as they sought to reduce the veils associated with the wrong use of money. One of the pioneers of the Religious Society of Friends, John Wesley, emphasized that people do not have to harm their neighbors through their business practices.
Socially responsible funds incorporate what is known as community investing, a concept that allows investing into community based organizations. The companies that issue these funds inject capital into CBOs to boost their financial base and to help them achieve their social responsibility goals. The money is injected in form of loans which are payable with an interest. The loans are used for meeting housing needs and small business creation.
An investor may need to know how socially responsible funds perform compared to other types of funds. It is a common phenomenon among many investors to think of withdrawing their investments from funds that are not solely focused on making profits. However, socially responsible funds perform as well as other funds and the Morningstar predicts that, they will be doing better than most others as time goes by, especially with the growth in technology.
Peter Gitundu Creates Interesting And Thought Provoking Content On Mutual Funds. Read More Of His Articles Here Socially Responsible Funds
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