Author Topic: Ethical investing  (Read 2353 times)

Falconer

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Ethical investing
« on: December 28, 2013, 12:49:02 PM »
Hallo dear MMM followers,
I was looking at the make up of ETFs like the S and P 500 and other index fund related ETFs and saw many companies who I personally see controversial due to their business practices and the way the make their money.

When I buy my first ETFs I want to buy something where I do not feel that I am making money on the back of the environment and low wage employees and most importantly companies who manufacture weapons for military purposes. (I have no problem with guns for hunting or personal protection, I earn part of my living by organizing international hunting trips)

Has anyone found a ETF that is social, environmentally and ethically responsible?

lcg377

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Re: Ethical investing
« Reply #1 on: December 28, 2013, 01:26:18 PM »
Have you heard of the Parnassus Fund? I am still digging out from student loans, so I'm not at the investing stage yet, but they had materials at my "green" college.  I'm not sure what type of investments they offer, but they do focus on ethical companies.

Eric

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Re: Ethical investing
« Reply #2 on: December 28, 2013, 02:14:32 PM »
There's a few threads floating around.  Start here:

www.mrmoneymustache.com/forum/investor-alley/the-ethics-behind-index-funds/

Falconer

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Re: Ethical investing
« Reply #3 on: December 28, 2013, 09:31:33 PM »
thank you for the hints

chasesfish

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Re: Ethical investing
« Reply #4 on: December 29, 2013, 05:37:52 AM »
This may be a long rambling post, so here it goes:

"Ethical" funds or socially conscious funds under-perform the market in general.  This is because they often leave out things like energy, conglomerates that include defense contracting, and alcohol.    If you don't believe me, go pull up the ticker for the Vice Fund (VICEX).  It invests in nothing BUT the companies left out of socially conscious funds (meaning they have an implied higher cost of capital because less people are willing to invest in them).  It has outperformed the market even with its ridiculously high 1.64% fee ratio a year dragging on the fund.  I won't invest with it due to those fees, but it continues to do better. 

Socially conscious funds are also going to be more expensive than an index fund because your paying managers to make a "moral" decision.  You can also make your own moral decisions (like, I actually think Sam Adams is a good company company, even if they make alcohol)

That being said, I am a strong believe in investing in an individual company with a well rounded mission that includes its shareholders, employees, clients/customers, and community.   Here are some examples:

Starbucks:  I really wish I had invested more in this when Howard Shultz came back.  I sold the stock a while back because "it looked expensive", and am kicking myself in the rear.

Costco:  Just an excellent company, excellent stock.  Low employee turnover and constantly improving efficiency has been very good to me as a shareholder.

If investing in socially conscious companies is your goal, I would recommend doing long research and picking 5-10 individual companies, make sure your values align with their and you understand their business and how they make money.  Then buy their stock when its a good value.  If your not willing to do that, then just buy an index fund until you are.

Falconer

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Re: Ethical investing
« Reply #5 on: May 16, 2014, 07:44:02 AM »
Sorry for the late reply. Thank you for your input.

I will think hard an long about what you said.