Invest With Your Values

As investors, we sometimes separate our thoughts on finances from our thoughts about values. We might go to church on Sunday and hear the preacher speak against excessive drinking, then on Monday the dividend checks from investments in alcoholic-drink makers arrive in the mail.

It doesn't have to be this way. A range of investing options exists that can reflect our values and beliefs. Permit me to share a few examples.

If you're a Democrat, you might be interested in the Blue Funds, in large-cap and small-cap flavors, that hold companies that give more support to the Democratic Party and also "act blue" -- treating employees fairly, being environmentally responsible, and avoiding harmful products, for example. Representative holdings include Adobe (Nasdaq: ADBE  ) , Costco (Nasdaq: COST  ) , and Western Union (NYSE: WU  ) . (I covered these funds awhile back, as did S.J. Caplan, who raised some good objections to them.)

If your politics are more to the right, consider the Free Enterprise Action fund. According to its website, the fund "aims to defend free enterprise from the Left's use of capitalism against capitalism." (Its expense ratio, at 1.82%, is steep even after a hefty fee waiver, and its returns are not quite stellar, so just keep an eye on it for now.) The fund's holdings include companies such as Exxon Mobil (NYSE: XOM  ) and Cisco Systems (Nasdaq: CSCO  ) .

If your priority is social responsibility, many funds focus solely on that, such as the Winslow Green Growth (WGGFX) fund, which has a five-year average annual return of 23%, and holdings that recently included Chipotle Mexican Grill (NYSE: CMG  ) and SunPower (Nasdaq: SPWR  ) .

If you'd like to invest in holdings that reflect religious values, you've got options there, too. You can find funds for Christians or Muslims, managed in accordance with the tenets of each religion. Unfortunately, some of these funds charge a 5.25% front-end load and then go on to underperform the market.

But maybe none of these is for you. Maybe you just don't give a hoot about protecting the environment, or striving for religious ideals. Maybe you like your guns and your cigarettes and the like. If so, there's even a fund for you -- the Vice fund. As much as I'd like to criticize it (say, for its steep 1.75% expense ratio), I can't do so on the basis of its returns.

Over the past three years and five years, it has a solid, market-beating record, averaging 14% and 21% annually, respectively. Among its holdings are  tobacco companies, alcohol companies, gambling companies, and weapon makers, among others. 

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To learn more about socially responsible investing, read these articles:


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