Socially responsible investing (SRI) is an investment strategy that seeks to mitigate risk of unethical investments and align the investment portfolio with social, corporate, and environmental performance. It involves the use of exchange-traded funds (ETFs), closed-end funds, mutual funds and other instruments in order to achieve these goals.
While this approach can be quite a challenging task for investors and managers alike. In fact, it looks like this segment of the investing industry is growing at alarming speed. Currently there are more than 1,500 socially responsible ETFs. However, not all of them are suitable for investors looking to implement this strategy into their portfolios.
So, if you want help finding socially responsible ETFs to invest in, keep reading as we explain how to locate funds that align with your personal beliefs and financial goals!
Consider Your Ethical Values
Before investing in any ETF, you should first do some research to find out what the fund’s investment strategy is and if it aligns with your ethical values. This will help you to choose the right ETF for your portfolio. For example, some socially responsible ETFs will focus solely on companies that are environmentally sustainable or give back a portion of their profits to society. If this is something that you are interested in, you should look for ETFs that have such a focus.
On the other hand, if investing in socially responsible ETFs is more about increasing your impact on the world, you’ll want to choose funds that have a broader investment scope. Keep in mind that not all socially responsible funds are the same, so make sure that you invest in ETFs that are most suitable for your needs.
Know Your Investment Goals
Next, you need to figure out what your investment goals are. This will help you to narrow down the available ETFs to find the best ones. Naturally, you’ll want to choose ETFs that are the most suitable for your investment goals. This means that you’ll want to choose funds that have a low expense ratio, have a conservative investment strategy, and offer adequate returns for your investment portfolio.
Look at the Fund’s Holdings
One of the best ways to find socially responsible ETFs is to look at the fund’s holdings to see if its investments align with your ethical values.
You can find this information on the fund’s website or in the fund’s prospectus. Use the info you find to see if there are any companies that may not be socially responsible but may meet your investment goals. This way, you can choose ETFs that have a broader investment scope.
Talk to an Investment Advisor
When it comes to finding socially responsible ETFs, an investment adviser can play an important role. They can help you to choose the best funds for your investment portfolio or help you identify funds with companies you may not want to have in your portfolio.
The Bottom Line
Socially responsible investing (SRI) involves using your money to support companies that share your beliefs about social responsibility. This means you want to invest in companies that support causes such as environmental conservation, fair pay practices for employees, and more.
But even though there are several socially responsible ETFs available for investors to choose from, SRI can be a challenging task, as many of these funds are not listed on most major exchange platforms. But with the tips listed in this column, you can easily locate socially responsible ETFs that tick all your investment boxes.
