How to choose environmentally friendly mutual funds

Many investors are showing more concern for the environment, and are taking more care in choosing investments that are eco-friendly. But how can you be sure you are choosing environmentally friendly mutual funds? There are some steps you can take before choosing the mutual funds you will place your capital with, to make sure you have a positive impact instead of a negative one. The use of screeners is a great way to find funds that meet your specific criteria, and screeners can be either negative or positive. This software will help you determine the specific activities and investments that you want to avoid with negative screeners, or the funds that have the investment criteria you are looking for with positive screeners.

You can also find environmentally friendly mutual funds by doing all of the research possible. Look at the holdings that the fund has, and examine each specific company closely. Determine what each company does, and their impact on the environment. Renewable energy companies and those that use socially and environmentally responsible business practices are ideal holdings if you want to make a difference and choose eco-friendly investments. It is important to remember that when you choose mutual funds you are buying shares of an investment portfolio which can be very diverse, with a number of holdings in different industries and sectors. You will need to look at all of the holdings and evaluate them to ensure that you are actually choosing mutual funds that do not harm the environment.

Each investor will have a different idea of what constitutes environmentally friendly mutual funds. For some this may be about renewable energy, while for others this may mean investing in construction companies and materials which help with energy efficiency and are sustainable. There are a number of funds which market themselves as green funds, and they only invest in companies which meet the fund criteria. Choosing environmentally friendly mutual funds does not have to be confusing or hard to do, you just have to be willing to take the time and effort needed to do the proper research beforehand. Just because a fund labels itself green does not always mean all the holdings of the fund are.

If you want to be eco-friendly, but you also want to get great returns on your capital investment, then environmentally friendly mutual funds are a great way to do this. Using a screener can help you eliminate or include any funds which have holdings that you target. You can choose to eliminate companies which exploit oil and other natural resources, companies that pollute and have a history of harming the environment, or any other number of factors you may want to exclude. Some investors feel a moral obligation to choose, or exclude, certain types of businesses. Environmentally friendly mutual funds are those that choose eco-friendly businesses to add to the portfolio, while maximizing the investment return at the same time. These funds still offer diversity, but they also offer you the satisfaction of being environmentally conscious at the same time.

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