Ethical Investing: Performance versus Principles?

We look at how ethical funds stack up against their non-socially-screened rivals.

Muna Abu-Habsa 21 November, 2007 | 10:49AM
Managers of ethical, or socially responsible, funds have a difficult task. They have to earn competitive returns for their investors, but they need to do so whilst remaining firmly within the stated ethical criteria of their fund, whether those are environmental, political, social, or economic. Common ethical fund criteria might include screening out firms that are deemed to harm the environment and/or those involved with animal testing, genetic engineering, weapons, alcohol, tobacco or gambling.

The scope of an investor’s ethical and social goals is certainly one possible step in determining the suitability of specific funds. However, before you decide to align your investments with your ethical beliefs, it's worth noting how the available funds tend to perform relative to less const

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Muna Abu-Habsa  is a senior investment research analyst at Morningstar

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