Socially Responsible Mutual Funds

Taking a more hands-on approach to your financial planning is a great move, but it can feel overwhelming, and downright alienating to some of us. For starters, the typical Wall Street stockbroker vibe already makes many financial outsiders uncomfortable from the get-go. On top of that, it feels like so many of the different sources of information are just trying to sell you something or take advantage of you.

Trying to choose individual stocks can be tricky, and the fees for each trade can add up quickly. This is where mutual funds can be very useful. A mutual fund is a managed collection of stocks, usually based around a particular savings goal. If one of your goals is to be a socially responsible investor then I've got a few ideas that can help you meet that goal.

Investments You Can Feel Good About

We all have our own morals and ethics that guide us, and our own priorities when it comes to investing. More and more, people are looking to invest in companies they feel good about, or at the very least, companies they don’t have to feel guilty for owning.

Instead of just choosing funds based on your goal (income, growth, etc), you can also choose mutual funds that align with your morality and that encourage the type of world you want to live in.

If opening your quarterly account statement and seeing huge profits from the gun manufacturers in your portfolio, while the news plays in the background about yet another school shooting, or investing in tobacco companies and driving by a school to see groups of kids vaping makes you feel a bit uneasy, you’re not alone. This is why socially responsible mutual funds have been growing in popularity, which has resulted in more options to choose from, too.

What Types of Socially Responsible Mutual Funds Exist?

We’ve featured a few different types of socially responsible funds that are available currently. Different fund companies will package these concepts in slightly different ways, weighting companies differently, and using their own criteria for what constitutes socially responsible. It’s important to do your research into any fund you’re thinking of purchasing, to ensure that it truly matches up with your goals.

Here are a few of our favorites.

Funds that Empower Women

These funds aim to invest in companies that have women on their boards of directors or in high management positions, that ensure women have equal opportunities for advancement in the company and are treated fairly. In some cases, the funds themselves are managed by women, but not always. Learn more here.

Funds for Vegetarians and Vegans

These are funds that avoid investing in companies that directly contribute to the suffering of animals. BeyondMeat and similar vegan food companies are popular to find in these funds, but you’ll find different opinions when it comes to oil companies and other industries that can be very profitable, but are not good for the environment, and therefore aren’t good for animal life. Be sure to verify that a vegan or vegetarian fund’s goals meet with your own personal goals. Learn more here.

Funds that Don’t Support Guns

Firearms companies show up in a lot of different funds, so if you’re not actively avoiding them there’s a good chance you’re already invested in them. Fortunately, that’s easily avoidable and there are plenty of options to help you filter them out.

Some funds will take it a step further and try to use their investment dollars to influence firearms companies. It’s a way to try to force change from within, but it means the fund still has to hold those shares in order to gain influence on the companies board. Learn more here.

How to Invest In These Funds

After you’ve chosen which funds you want to invest in, you’ll need an investment account. If you know what you want to invest in I recommend a discount brokerage like Fidelity or Charles Schwab. Be mindful of the fees, understand the risks, and invest with a long-term perspective and you won’t have to worry about every ebb and flow of the market.

Updated Sep 13, 2019 by Jessica