Green mutual funds fall into the investment category of Socially Responsible Investment. But there are only a very few investment firms which offer funds which are REALLY socially responsible.
Anyways, keeping our focus on Green Mutual Funds,
“Green Mutual Funds” are funds that invest in companies whose activities, projects and investments are beneficial or atleast supportive for the environment, instead of ruining it or causing problems like pollution. Some simple examples for these kind of green companies can be those which are:
1. Engaged directly in helping the environment–like innovative recycling, waste management, or asbestos removal companies, or
2. Have clean, sustainable, “Green” business models– meaning that their processes are not environmentally harmful
Are Green Mutual Funds good investment option?
The Green Mutual Funds have been gaining popularity recently as more and more investors are starting to think about the environment. Increasing oil consumption, global warming effects, increasing rates of natural disasters, and similar other factors are now leading many investors to think that if we don’t start taking care of the environment, this Earth may not be a very nice place in the near future.
Hence, Green Mutual Funds are gaining popularity. However, Green Funds as an investment option depends upon what you are looking at in terms of returns and how the fund manager of the Green Mutual fund play around with the money of the investors.
As per the details available on various sites on internet, there are about 65 SRI or Socially Responsible Investment Funds, which “claim” to be Socially Responsible. Out of these, there are only SIX funds which can be really classified as Green Mutual Funds. They are as follows:
Portfolio 21 (PORTX):
PORTX is a fund which invests in companies of all sizes around the world that are incorporating sustainability into everyday business practices.
Though they may have changed their investment strategy over a period of time, but from the information that is available on various source like internet, here are the valuation parameters for investment in the Green mutual fund call PORTX or Portfolio 21:
Companies are evaluated on a wide range of factors: their products and services, investments, leadership on environmental sustainability, environmental management processes, liabilities and facility-level improvements. To get in the fund, a company doesn't have to be outstanding in all areas, but must have strengths in multiple areas.
Winslow Green Growth:
After PORTX, there is another hugely popular Green Mutual Fund called Winslow Green Growth Fund. This fund primarily invests in small cap growth companies primarily in the U.S. However, they have strict criteria for investment – They invest exclusively in firms whose impact on the environment is either beneficial or benign. They first shortlist the so called GREEN companies and then among them, they look growth opportunities. The segment of small cap stocks give them a big and wide base of companies for investing, since there are thousands of small companies available. They also do an environmental review to make sure their invested companies are off the track and started causing environmental degradation. One of the very popular Green mutual fund for investment with depth of options for investments.
PowerShares WilderHill Clean Energy Portfolio
PowerShares WilderHill Clean Energy Portfolio tracks the WilderHill Clean Energy Index (ECO), which is a selected basket of 36 clean energy stocks that define the U.S. clean energy sector The clean energy sector is a term used to define the businesses that stand to benefit substantially from a social transition by use of cleaner energy and conservation. This fund is primarily an ETF or Exchange traded fund, which can be called as a clean energy ETF or Green ETF, which attempts to replicate the WilderHill Clean Energy Index (ECO). A very popular fund among the investors, giving them the Green Mutual Fund concepts yet available for real time trading as it is an ETF.
Sierra Club Funds:
Though there are no real “Green Companies” in the large cap segment, bu this Sierra Club fund invests in large cap companies which are thoroughly screened to avoid industries the Sierra Club considers environmentally destructive. So this fund may not go for companies which are in the business of solar energy, but they are open to all companies which attempt to care for the nature and environment & minimize their ecological footprint that's good for the environment and can have a widespread effect. Since they are large companies, they have the money and influence to make a footprint if they take any green initiative.
Related: Alternative Energy Mutual Funds Low Cost Mutual Funds & Green Investing: Green Investments: Consider these stocks now!
New Alternatives (NALFX):
This fund, NALFX, basically invests in companies of all sizes that too on a global basis which have a positive impact on the environment. The fund emphasizes investments in renewable energy and the environment such as clean air and water, conservation and pollution prevention. The Fund's goal is to invest 25% or more of assets in companies involved in alternative energy.
Green Century:
| The Green Century fund invest in companies of all sizes but their primary focus is on large caps. This fund is similar to the Sierra Club fund discussed above when it comes to selecting large cap companies in their environmental initiatives. | Table of Contents |
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