What are Green Mutual Funds?

What exactly are green mutual funds, and why should I invest in them? Green mutual funds are mutual funds that only invest money into businesses and companies that are environmentally friendly and responsible , and that make decisions based on social consciousness as well as the bottom line. Who or what determines whether a mutual fund is green or not, and how is this determined? The mutual fund manager makes the decision on whether to invest in green businesses or not, and they also decide whether a company or investment is green or not. Many investors put their capital in green mutual funds as a way of making more environment friendly investments, but these funds may not do as well as some others because of the fact that the profit is not the sole consideration. You must determine if you are willing to settle for a slightly smaller return on your investment in exchange for being socially and environmentally aware. This is not to say that all green mutual funds have returns below the average, but some do under perform because of decisions by the fund manager not to invest based on the environment factor. With global warming, pollution, and the condition of the Earth, more people are becoming aware of the need to take action, and investing in green mutual funds can help do this.

Mutual funds are common pools of investment money that belong to a group of investors. With these funds, a professional money manager is used to make the best investment and financial decisions concerning the investment pool. A money manager may use different criteria to determine if an investment is green and environmentally friendly or not. One strategy that can be used makes this determination by avoiding certain industries and investments that are associated with negative criteria about the company. This can include alcohol and tobacco companies, gun businesses, pornography investments, gambling, testing that is done on animals, and many more factors. Another strategy to ensure an investment is green involves investing with companies that have criteria that is positive and friendly to the earth. These investments may include alternative renewable energy investments, investing in companies that practice fair trade, choosing companies that have environmental programs in place, and other criteria. Some green mutual funds will combine both methods when looking at investments.

If you are considering investing in green mutual funds, there are some things you should consider before deciding on which mutual funds to put your money in. Determine exactly how green you want to be in your investments, and how much risk and volatility you are willing to take. Would you invest in a fund that put your money with companies that drill for oil or natural gas, so long as the company has programs in place to protect the environment during the process? Are you willing to invest in companies that produce and profit from harmful items, like guns, booze, and cigarettes, as long as the environment is not damaged in the process? Once you have determined where you do not want your money to go, it will be easier to locate green mutual funds that share the same investment ideals. Ask questions to determine the investment goals for any green mutual funds before you put your money into the investment pool, to ensure that both you and the mutual fund manager have the same goals in mind.

The information supplied in this article is not to be considered as medical advice and is for educational purposes only.