How do I invest according to my ethics?
November 15, 2013 1:03 PM Subscribe
How can I find mutual funds to invest in that are inline with my ethics? For example I am vegan, liberal, pro-choice, feminist, not anti-gay, etc. To that end I'd like to not have companies that test on animals, engage in discrimination, are part of war effort, etc. Looking in my mutual funds there are some companies that I don't know about, and some that are sketchy like tobacco companies.
I have a mutual fund that is my short term investment, as well as retirement plan that is a "target date" fund so it is automatically adjusted for risk over time. I understand the companies included in a mutual fund will change over time.
I don't want to manage my investments as I'd like these to be set it up once and forgotten about it. The only thing I do now is automatic monthly deposits into the retirement account. I do not want to invest in individuals stocks as I'd like to lower risk associated with a mutual fund.
I have a mutual fund that is my short term investment, as well as retirement plan that is a "target date" fund so it is automatically adjusted for risk over time. I understand the companies included in a mutual fund will change over time.
I don't want to manage my investments as I'd like these to be set it up once and forgotten about it. The only thing I do now is automatic monthly deposits into the retirement account. I do not want to invest in individuals stocks as I'd like to lower risk associated with a mutual fund.
Best answer: I dunno, I'm having problems finding toilet paper! (Most brands are either made by Proctor and Gamble, who test on animals or the Koch Brothers, who own Georgia Pacific. God, I hope Kimberly Clark isn't into anything horrible.)
Here's a list from Kiplinger of five Socially Responsible Mutual Funds.
posted by Ruthless Bunny at 1:30 PM on November 15, 2013 [1 favorite]
Here's a list from Kiplinger of five Socially Responsible Mutual Funds.
posted by Ruthless Bunny at 1:30 PM on November 15, 2013 [1 favorite]
The Forum for Sustainable and Responsible Investment rates mutual funds according to many (and perhaps) all of your criteria as well as financial performance.
I don't want to manage my investments as I'd like these to be set it up once and forgotten about it.
Even if you don't actively manage your portfolio, it's still a good idea to rebalance it every year.
posted by DrGail at 2:12 PM on November 15, 2013
I don't want to manage my investments as I'd like these to be set it up once and forgotten about it.
Even if you don't actively manage your portfolio, it's still a good idea to rebalance it every year.
posted by DrGail at 2:12 PM on November 15, 2013
Best answer: Probably stating the obvious, but the higher your standards, and the more demanding and exacting you are with your requirements, the fewer options you'll have.
For example, I had some money invested in the Domini Social Equity Fund, which claims it only invests in companies which meet 'social and environmental standards.' But when I took a closer look at their portfolio, I noticed that, well, let's just say it does not consist mainly of anarchist bookstores, solar-powered locavore food trucks and lesbian separatist campgrounds.
posted by box at 2:36 PM on November 15, 2013 [1 favorite]
For example, I had some money invested in the Domini Social Equity Fund, which claims it only invests in companies which meet 'social and environmental standards.' But when I took a closer look at their portfolio, I noticed that, well, let's just say it does not consist mainly of anarchist bookstores, solar-powered locavore food trucks and lesbian separatist campgrounds.
posted by box at 2:36 PM on November 15, 2013 [1 favorite]
Best answer: This is skirting the direct question but can I humbly suggest you reconsider the whole thing? First - the implication is that by buying stock in say Halliburton you are somehow complicit in the WarMachine, which I don't think is accurate. You are not giving the company any money by buying stock, and if anything your partial ownership of the company will entitle you to be a pain in their ass to change what it is you see them doing wrong. (There are plenty of examples of people with 1 share of stock getting controversial votes on the proxy ballots).
Secondly, Socially Responsible mutual funds are kindof a joke - their fees tend to be higher, their returns tend to be lower, and like box points out its very difficult if not impossible to really implement their stated goals.
My suggestion would be to take your money, dump it into SP500 ETF, and take the money you save by not paying the mutual fund fees and donate it to organizations that agree with your views.
posted by H. Roark at 3:03 PM on November 15, 2013 [7 favorites]
Secondly, Socially Responsible mutual funds are kindof a joke - their fees tend to be higher, their returns tend to be lower, and like box points out its very difficult if not impossible to really implement their stated goals.
My suggestion would be to take your money, dump it into SP500 ETF, and take the money you save by not paying the mutual fund fees and donate it to organizations that agree with your views.
posted by H. Roark at 3:03 PM on November 15, 2013 [7 favorites]
Best answer: I agree with H. Roark. Most people do not realize that the average investor likely never buys stock from a company, they are always buying it from another secondary party. Therefore, the financial benefit that you offer by buying a companies stock is for all intents and purposes zero. The socially responsible mutual funds that I have seen likely ALL underperform the SP500 etf over time. (if they don't it is almost assuredly non-repeatable out performance.)
For the relatively unsophisticated investor I would say the SP500 etf is almost assuredly the best guess as it will plunk you into the 30th percentile of performance over time. Then take any excess benefit you may wish and donate it to your causes.
Mutual funds overcharge the hell out of you for a non-sustainable advantage once you account for expenses. In my opinion, mutual funds are not socially responsible simply because they rake the consumer too much for commissions. If you could show me one that charge 1/4 of a percent or less annually in net expenses I might be willing to reconsider.
posted by jcworth at 3:28 PM on November 15, 2013
For the relatively unsophisticated investor I would say the SP500 etf is almost assuredly the best guess as it will plunk you into the 30th percentile of performance over time. Then take any excess benefit you may wish and donate it to your causes.
Mutual funds overcharge the hell out of you for a non-sustainable advantage once you account for expenses. In my opinion, mutual funds are not socially responsible simply because they rake the consumer too much for commissions. If you could show me one that charge 1/4 of a percent or less annually in net expenses I might be willing to reconsider.
posted by jcworth at 3:28 PM on November 15, 2013
Best answer: Consider the Parnassus family of funds.
You say you don't want to invest in companies that are part of the war effort, and consider tobacco companies sketchy; these match two of their exclusionary screens.
Here's an article/post that claims that they also don't invest in companies that conduct "unnecessary and inhumane animal testing" and that as activist shareholders, they've pushed at least one major company to include women on its executive board.
Their Parnassus Fund and Parnassus Equity Income Fund routinely beat the S&P 500 over multiple timeframes; sometimes dipping just below when you take into account their .90% expense ratio.
And, to disagree with some other respondents, by buying stock in a company you are helping that company. Your one dollar isn't a dollar profit for them, but it is support. Otherwise, why would the company be selling the stock? Because it hurts them when you buy it?
If you ever have a Green Festival come to your town, representatives from socially responsible funds tend to have booths there; you can question them directly about their stock list and their screening criteria.
posted by mistersix at 5:10 PM on November 15, 2013
You say you don't want to invest in companies that are part of the war effort, and consider tobacco companies sketchy; these match two of their exclusionary screens.
Here's an article/post that claims that they also don't invest in companies that conduct "unnecessary and inhumane animal testing" and that as activist shareholders, they've pushed at least one major company to include women on its executive board.
Their Parnassus Fund and Parnassus Equity Income Fund routinely beat the S&P 500 over multiple timeframes; sometimes dipping just below when you take into account their .90% expense ratio.
And, to disagree with some other respondents, by buying stock in a company you are helping that company. Your one dollar isn't a dollar profit for them, but it is support. Otherwise, why would the company be selling the stock? Because it hurts them when you buy it?
If you ever have a Green Festival come to your town, representatives from socially responsible funds tend to have booths there; you can question them directly about their stock list and their screening criteria.
posted by mistersix at 5:10 PM on November 15, 2013
Best answer: My friends* have a startup that is aiming to make it easy for people to do exactly what you're trying to do. They don't have anything publicly accessible yet, but you can probably email them to be put on a mailing list, maybe get access to some betas.
On a personal note, I think you can think about this in a number of ways--not feeling like your financial decisions are mis-aligned with your beliefs, encouraging change in the world, or just pursuing a particular investment strategy (say, you think companies with women in their leadership will outperform male-dominated competitors, for example).
*To be completely clear, I am friends with the founders. I do not have any financial stake or interest in their company otherwise.
posted by danny the boy at 6:04 PM on November 15, 2013
On a personal note, I think you can think about this in a number of ways--not feeling like your financial decisions are mis-aligned with your beliefs, encouraging change in the world, or just pursuing a particular investment strategy (say, you think companies with women in their leadership will outperform male-dominated competitors, for example).
*To be completely clear, I am friends with the founders. I do not have any financial stake or interest in their company otherwise.
posted by danny the boy at 6:04 PM on November 15, 2013
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