Green Funds: Saving the World, One Investment at a Time

Green funds have become very popular as more and more people are becoming environmentally conscious. This type of mutual fund is very intriguing from an investment standpoint. Here are a few things to consider about green funds and how they try to save the world one investment at a time.

What Are Green Funds?

A green mutual fund is a fund that has strict criteria on what they can invest in. Each green fund set up their own rules and decides what things they will avoid putting money into. If an investment does not meet the strict investment criteria of the fund, they will not invest in it regardless of how profitable it may be. This means that social standards are placed above making money with this type of fund.

The fund managers of a green mutual fund will place a lot of scrutiny on each individual investment that they choose. They will analyze the company and make sure that they adhere to the rules that are set forth for the fund. In this manner, the fund can actually make a difference for the world by investing in things that will advance it.

What Is Invested In

Green mutual funds invest in many different types of securities. Certain green mutual funds will only invest in companies that have displayed a high level of concern for the environment. However, these funds may also choose companies that are the most environmentally conscious in their particular industry. Therefore, some green funds are more strict than others on who they choose to invest in.

Some of these funds will invest in things that are considered socially responsible as well as environmentally responsible. For example, a green fund might prohibit investing in any companies that utilize child labor. Others might object to investing in things such as alcohol, gambling, or tobacco. Therefore, the term "green" does not necessarily have to be related to the environment.

Alternative Energy

One popular type of green fund invest their resources into companies that are trying to create alternative forms of energy. These mutual funds recognize that there is a big dependence on oil and wish to promote the growth of alternatives to it. This might include investing in companies that produce solar equipment or a new type of fuel.

Resource Management

These funds also will often invest in companies that deal with resource management. For example, they might invest in a company that is in charge of water or waste management for a particular area.

Volatility

From an investment standpoint, it is still unsure as to what the future holds for green funds. These funds are still relatively new and do not have a lot of historical data to use for comparison. Since they have been available in the market place, these funds have traditionally been very volatile. One year a fund might post astounding growth and then follow that up with a big loss. If you plan on investing in green funds, you want to make sure that you plan on keeping your money in them for least five years.

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