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What
Are Socially Responsible Investing
(SRI) Funds?
SRI
stands for Socially Responsible Investing and SRI funds
and indexes strive to be just that. Of course,
Socially Responsible means different things to different people
and to different funds and index managers as well. If you are
interested in investing in Socially Responsible Fund's make
sure you check the fund or indexes criteria to make sure they
are a good match for your own.
Some, SRI's for instance, will not include
any arms manufacturers, but might include tobacco or alcohol
industries. Other funds
will exclude any stock whose company might be involved in animal
testing. Some funds put more emphasis on how a company treats
its employees. This process of inclusion or exclusion is called "screening",
and each fund has its own screening criteria. Knowing the screening
criteria can be a big help in deciding which fund is right
for your style of investment.
Some of the larger and best known socially responsible funds
and indexes are:
1.
Pax world - Pax worlds funds were among the first, if not
the first socially responsible Mutual funds. Luther Tyson and
Jack Corbett Launched the Pax World fund, on August 10, 1971,
the fund was launched with $101,000 in assets and created the
first broadly diversified, publicly available mutual fund to
use social as well as financial criteria in its investment
decisions. Since then over 175 funds have followed in their
footsteps. In 1999 in the United States alone there was over
2 trillion dollars invested while following socially responsible
guidelines. Pax World family of funds seeks not to invest in
companies that make defense or weapons-related products or
that make money from the manufacture of tobacco, alcohol, or
gambling products. They also make an effort to reward socially
responsible behavior by investing in companies treat the environment
and their employees well. Even if a socially responsible investor
does not invest in this fund, a look at their holdings gives
a good clue as to which companies are socially responsible
according to this set of criteria. Pax world currently has
four funds to choose from, including a money market and a growth
fund.
2.
Domini Social investments - The Domini Social Equity Fund
is one of the oldest and best-known Socially
Responsible Index
funds. It tracks the Domini 400 Social Index (DSI) which is
an index comprised of companies that pass multiple broad-based
social or ethical screens. It was launched in June of 1991,
and boasts higher returns than the S&P 500 index since
the fund's inception.
3.
FTSE4good - The FTSE4Good series, was first announced in
March 2001, and was launched in July 2001. It consists of
four
tradable indexes and four benchmark indexes. A tradable index
is an index which allows investors to trade and invest in companies
covered by the benchmark index.
The completion of the series extended the availability of
information on Socially Responsible Investments to cover 90
percent of the world’s financial markets. According to FTSE
The FTSE4Good index series was created to provide SRI Investors
with an independent and accurate tool to measure the performance
of companies meeting international CSR standards. FTSE for
good and the Dow Jones Sustainability Index are the most commonly
known SRI indexes.
4.
Dow Jones Sustainability Group Indexes - Since the beginning
of 1999 the Dow Jones Sustainability Group Indexes has been
screening companies according to stances on economic, environmental
and social developments. They are based on the cooperation
of Dow Jones Indexes, STOXX Limited and SAM .
These four funds and indexes are the most watched of the socially
responsible investment funds. They provide an excellent background
for people new to Socially Responsible Investment and can provide
a good view of the state of the socially responsible markets
world wide.
They are However not the only funds by a long shot. There
are currently over 175 Socially Responsible Investment funds
on the market and there number is growing every day. With new
rules in Europe requiring that funds disclose their stance
on socially responsible Investment to their shareholders, we
can likely see a lot more SRI funds in the future. # # # # # SolveYourProblem.com : 2007
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