| e popularity of preserving the environment | | | | money. |
| continues to gain momentum, some investors are | | | | How Ethical Funds are Chosen |
| turning away from traditional managed funds and | | | | Ethical funds are chosen using positive or negative |
| are instead investing in funds that have higher | | | | screening or a combination of both. Positive |
| ethical standards. This means that the funds | | | | screening involves looking for companies or |
| invest in industries, businesses, and other entities | | | | industries that have upheld the ethical standards |
| based on their ability to have a positive impact on | | | | necessary to continue producing a product or |
| the environment rather than a negative impact. | | | | service without doing significant damage to the |
| Companies whose goals are to provide renewable | | | | environment. Companies that have changed the |
| energy, companies who regularly recycle materials | | | | types of materials they use to become more |
| used to create their products and industries that | | | | eco-friendly or companies that have improved |
| do not rely on non-renewable resources may be | | | | working conditions for employees would be |
| included in an ethical fund. | | | | considered a wise investment for an ethical fund. |
| For many investors, defining what's ethical and | | | | Negative screening involves rejecting companies |
| what is not remains the ultimate question. For | | | | or industries that do not demonstrate |
| example, if a logging company, which derives its | | | | environmental concern or those companies that |
| income by harvesting trees, takes the time to | | | | promote the use of tobacco, alcohol or other |
| replenish the supply of lumber by planting new | | | | substances that do not promote the health of |
| trees, is it considered ethical enough to be included | | | | people. |
| in an ethical fund? Some investors would argue | | | | Companies that fit the criteria set up by the fund |
| yes, while others would say no because the | | | | will be included. Others will be avoided. This |
| company has still damaged the environment even | | | | screening process is done often because |
| though it has taken the time to replace the trees | | | | companies that may not have been considered |
| with new ones. | | | | ethical in the past may have made changes that |
| Are Ethical Funds Profitable? | | | | are now considered suitable for investment by |
| As with any managed fund, the amount the fund | | | | the fund. |
| earns each year will vary depending on how it's | | | | Researching Funds |
| managed, market conditions and many other | | | | When considering investing in managed funds |
| factors. Overall, ethical funds have kept up with | | | | – whether in an ethical fund or a more |
| traditional managed funds, and in a lot of cases | | | | traditional fund – it is always a good idea |
| ethical funds have actually outperformed | | | | to review independent research on the fund for |
| traditional funds. | | | | an objective professional opinion. It is also |
| When choosing an ethical fund, it's important to | | | | important to consider the fees charged by the |
| look at the criteria by which it chooses its | | | | fund, as they can differ significantly between |
| investments. Find out the types of companies and | | | | funds and will impact on your final return as an |
| industries the fund manager invests in as this will | | | | investor. |
| help you determine if it's worth investing your | | | | |