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Investing in Socially Responsible Mutual Funds
By Debora and Reathel Geary
Ten years ago, Linda Pei was a stay-at-home mom of two small children. Like many parents, she wanted to help make the world a better place for her kids. Pei also believed that an important way to influence the future was by affecting where people invested their money. So she started a mutual fund.
Women's Equity Mutual Fund (WEMF) is part of a growing trend in the financial world that allows people to put their money in investments that match their values. This is sometimes called socially responsible investing (SRI).
What it means is that some mutual funds don't just worry about financial performance of the company stocks they include in their portfolio. Some think about factors like a company's environmental record, whether they use child labor or how well they treat their employees. By investing specifically in companies that meet social performance criteria as well as financial ones, socially responsible mutual funds try to influence the way companies do business.
Parents might find socially responsible mutual funds particularly appealing for a couple of reasons. Parenthood often changes your values and priorities – and it also changes your savings needs. Socially responsible mutual funds provide a way to save for your house down payment, your retirement or your child's education while supporting issues that are important to you.
There's nothing like the arrival of a new baby to shift what really matters to parents. Suddenly the pollution levels in your neighborhood aren't just a footnote on the nightly news – you wonder if your child will be more likely to develop asthma. You actually read the fine print in your employee benefits package. The stories of guns and cigarettes in schools seem a lot more disturbing. Issues that didn't matter pre-baby take on more importance, and some of these issues are heavily affected by the behavior of businesses.
You might not think that your meager savings could make much difference in corporate America, but Pei disagrees. "Collectively through mutual funds, we can all come together and become a single voice, be powerful," she says. "There are so many issues out there. If no one says anything, nothing will happen."
