- What is the "KLD 400 Social Index"?
- How has SRI generally changed other areas of investing?
- Why do individual investors like to invest in socially responsible forms of investing?
- What is another form of sustainable or socially responsible investing?
- Are there any conflicts when it comes to SRI?
- What other major concern might investors have while investing in socially responsible funds?
What is the "KLD 400 Social Index"?
The KLD 400 Social Index consists of top socially responsible mutual funds. Some funds that compose the index can generate high returns, even compared with other non-socially responsible funds.
How has SRI generally changed other areas of investing?
Because many investors believe such environmental issues as global warming may have a direct negative impact on their investments, they are seeking more environmentally sensitive companies in which to invest.
Why do individual investors like to invest in socially responsible forms of investing?
Many investors like to invest in SRIs as a way to protest and give voice to their shared beliefs about a social cause, and feel that by making a certain investment, they are supporting their shared beliefs for a particular cause. Many unions and large pension funds that invest retirement money for millions of individuals have made investments or offered these types of investments to effect change through the pooling of resources of millions of members, as both members and managers of these investments want more socially impactful investments as part of their overall portfolios.
What is another form of sustainable or socially responsible investing?
Another popular form of sustainable or socially responsible investing is impact investing, whereby investors hope to make a positive impact on society by investing in com
Some companies that might insist they are socially responsible will, upon closer investigation, be revealed as following unethical practices, such as employing child labor in other nations.
panies, organizations, and funds. The investments, as in traditional investing, are made to pursue profits, returns, and financial growth, as well as to make investments that lead to positive and measurable results or impacts on society.
Are there any conflicts when it comes to SRI?
There can be many philosophical conflicts when you choose to invest in a socially responsible fund. Morningstar cites the example of an investor desiring to make an SRI in an emerging market fund that purports to be "socially responsible." The conflict arises because perhaps one or more of the countries targeted by fund managers may be involved in many activities that are antithetical to socially responsible investing, such as engaging in child labor, unfair labor practices, broad violations of human rights, environmental disregard, etc. It is important to consider all facts about the strategy of a fund before investing.
What other major concern might investors have while investing in socially responsible funds?
Another major concern while you invest in SRIs is ensuring that the funds actually are acting socially responsibly when deciding what companies to include in the portfolio. Morningstar, through research conducted by MarketWatch, found that out of 20 large socially responsible funds, half invested directly in oil companies that may not be acting in a socially responsible manner. Morningstar also reported that only 27% of socially responsible funds file shareholder resolutions, or have activist shareholders who try to influence the fund's management into making correct investment choices.