With Green Mutual Funds Into Green Century

Green Mutual Funds in the US are from the Socially Responsible Investment (SRI) mutual funds. There are just about sixty SRIs out of which a mere six call themselves 'green'. These six 'green' mutual funds are Portfolio 21, Sierra Club Funds, Green Century, the Power Shares WilderHill Clean Energy Portfolio and Winslow Green Growth. Most of them and have portfolios that include companies with a record of strong environmental performance and also those, which have a business profile consisting of environmental problem solutions. Their funding tilts positively towards investing in companies that come up with innovative products/solutions addressing environmental concerns. As a policy they refrain from making investments in companies which have low-grade environmental records.

Green mutual funds usually have a diverse portfolio consisting of stocks and bonds of 'green' companies of all sizes; small, medium and large. Investments in small and medium companies are open to risks of higher price fluctuations as compared to larger and more established companies. Many mutual funds have a policy to direct a particular percentage of their net assets towards investment in bonds of below investment grade but which can yield high returns. This involves a greater risk than by investing in bonds that are more highly rated.

Environmentally conscious investors have their own preferences for their investments going to particular type of companies; for example companies into production of wind or solar energy products. When they make an investment in a mutual fund the money is put in a common pool and the decision for investment lies with the fund manager(s). Hence such investors do a research to locate Green Mutual Funds and examine the fund’s profile and portfolio before buying units in the mutual fund. If they cannot find a suitable company, they even post blogs on the web seeking suggestions/directions or references from others. People make sincere efforts to avoid their savings going to help corporates having work ethics opposed to what they themselves believe in.

But the fact remains that besides investing with their values, people want to see their money grow. This is why green mutual fund managers go for a diverse portfolio of large and small caps and bonds that contribute to stable growth. The portfolio may not have large cap 'pure green' companies as they just don't exist. But there are many companies in different stages of enlightenment and the choice is made from among them targeting those with records of strong financial performance.