Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you want to invest in socially responsible companies without spending gobs of time researching the universe of stocks in order to find them, the iShares KLD 400 Social Index ETF
The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF's expense ratio -- its annual fee -- is a relatively low 0.50%. The fund is fairly small, too, so if you're thinking of buying, beware of occasionally large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.
This ETF's performance has been roughly in line with the S&P, underperforming it by a smidge over the past three and five years. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
With a low turnover rate of 10%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Plenty of socially responsible companies had strong performances over the past year. Intel
United Parcel Service
Other companies didn't do as well last year, but could see their fortunes change in the coming years. 3M
The big picture
Socially responsible investing is actually a profitable way to build wealth. If this has piqued your interest, you might look into these other ETFs. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.
Learn about the 5 ETFs That Could Soar in 2012. And if you're looking for some great investments beyond ETFs, consider these 12 Dividend Stocks for 2012.