Seeking a no pseudoscience investment fund

August 30, 2023 1:56 AM

Financial advisor has talked about some funds which promise to not include companies producing firearms, weapons, and tobacco. Are there funds which will not include pseudoscience and "woo"? No crystals, nor homeopathic remedies, nor magnetic bracelets, nor Biodynamic farms, etc
posted by Sophont to Work & Money (5 answers total)

Not too many publicly traded companies actually produce such products. However if you want to avoid companies that profit from selling such crap, you're going to have to avoid the retail sector entirely, including Amazon, CVS, Walmart, etc. I'm always appalled at the aisle of homeopathic quackery at CVS. And Amazon probably sells more quack shit than anyone else.

I've never heard of a mutual fund that specifically avoids companies producing or selling pseudoscientific woo.

Anyway as I am sure someone has told you, managed stock mutual funds historically never outperform market index funds -- with much lower costs -- over any period of time that matters. So in a very real sense investing in any stock mutual fund is purchasing "pseudoscientific woo" all by itself, with the woo part being whatever "analysis" guides the fund's investment strategy.
posted by spitbull at 3:10 AM on August 30, 2023 [19 favorites]

Best answer: I work on a product that lets you build highly customized ESG models and portfolios. To make the product work we use third-party lists of securities (stocks) for each ESG factor; they maintain a set of criteria for what constitutes a “tobacco producer” or whatever and then evaluate publicly-traded companies to see whether they should be on the list or not.

There’s no “woo” category available from our provider and I suspect there’s none available at all. The classes of product that you can avoid are generally very specific: tobacco, weapons, alcohol, pornography. “Woo” is harder to define and thus more labor intensive; also there’s less demand for such a list.

The “most business is a little woo” problem is real but that’s a problem with the other products I’ve mentioned too and in general you are able to say “absolutely nothing to do with weapons” OR “absolutely no weapons manufacturers but weapons retailers are ok” OR “no manufacturers and no retailers where more than 50% of sales are weapons sales” (so you can still own e.g. Walmart but not an actual gun shop).

If you’re able to do Direct Indexing, where instead of a fund you personally actually own fractional shares of all the stocks in an index (or a model that tracks the index, usually a subset of the index), it’s possible to exclude a specific security that bothers you for whatever reason, like say Herbalife. But this is usually only available to people with a lot of money to invest.
posted by mskyle at 4:03 AM on August 30, 2023 [9 favorites]

I own some ETFs (similar to a mutual fund) that focus on sectors that do not include woo. One is banking, one is green energy, etc. There are a bunch to choose from.
posted by ananci at 6:25 AM on August 30, 2023 [2 favorites]

Yes that's probably good thinking: positively invest in companies and sector funds that do depend on and promote real science.
posted by spitbull at 7:25 AM on August 30, 2023 [4 favorites]

Friends Fiduciary is a Quaker-based financial management company that invests in line with Quaker testimonies (read: values), in particular not investing in weapons. You can read their full description of what they do at the site.
posted by Well I never at 3:43 PM on August 30, 2023 [1 favorite]