As climate change, social equality, and corporate responsibility continue to be hot-button issues, many investors are turning to ethical funds as a way to align their values with their financial goals. Ethical funds, also known as socially responsible funds or sustainable funds, are investment vehicles that focus on companies that meet certain environmental, social, and governance (ESG) criteria. These funds avoid investing in companies involved in controversial industries such as tobacco, weapons, or fossil fuels, and instead prioritize companies with strong track records of sustainable practices and ethical behavior.
With the rise of interest in ethical investing, the number of ethical funds available to investors has grown significantly in recent years. This increase provides investors with a wide range of options to choose from, each with its own unique approach to ethical investing. To help navigate this landscape, we’ve compiled a list of some of the best ethical funds for 2021.
1. Vanguard FTSE Social Index Fund (VFTSX)
The Vanguard FTSE Social Index Fund is a popular choice among ethical investors due to its low expense ratio and focus on companies with strong ESG credentials. This fund tracks the performance of the FTSE4Good US Select Index, which includes companies that meet specific ESG criteria. With a diverse portfolio of large and mid-cap companies across various sectors, the Vanguard FTSE Social Index Fund provides investors with broad exposure to socially responsible companies.
2. Calvert Equity Fund (CSIEX)
The Calvert Equity Fund is a standout option for investors looking to align their investments with their values. This fund employs a rigorous screening process to select companies that uphold high standards of corporate responsibility and sustainability. By investing in companies with positive ESG profiles, the Calvert Equity Fund aims to generate competitive returns while making a positive impact on society and the environment.
3. TIAA-CREF Social Choice Equity Fund (TICRX)
The TIAA-CREF Social Choice Equity Fund is another top performer in the ethical investing space. This fund seeks to invest in companies that demonstrate strong ESG practices while delivering competitive financial returns. With a diversified portfolio of large-cap stocks, the TIAA-CREF Social Choice Equity Fund offers investors the opportunity to support socially responsible companies while pursuing their investment goals.
4. Parnassus Core Equity Fund (PRBLX)
The Parnassus Core Equity Fund stands out for its commitment to investing in companies that exhibit exemplary ESG performance. This fund follows a stringent screening process to identify companies that prioritize sustainability, ethics, and good governance. By investing in a concentrated portfolio of high-conviction stocks, the Parnassus Core Equity Fund aims to deliver strong returns while promoting positive social and environmental outcomes.
5. Domini Impact Equity Fund (DSEFX)
The Domini Impact Equity Fund is a pioneer in the field of ethical investing, having launched one of the first socially responsible mutual funds in the United States. This fund focuses on companies that are leaders in various ESG categories, including environmental sustainability, human rights, and diversity. With a long track record of generating competitive returns while adhering to strict ethical criteria, the Domini Impact Equity Fund remains a top choice for socially conscious investors.
Investing in ethical funds not only allows investors to support companies that are aligned with their values but also provides the potential for financial returns. By selecting the right ethical funds for their investment goals, investors can make a positive impact on society and the environment while building a diversified portfolio that has the potential to deliver competitive returns over the long term.
As interest in ethical investing continues to grow, the options for ethical funds are likely to expand further, providing investors with even more opportunities to invest in companies that are making a positive impact on the world. Whether you’re a seasoned investor looking to align your portfolio with your values or a newcomer to ethical investing, there are plenty of ethical funds to choose from that can help you achieve your financial goals while making a difference in the world.
In conclusion, ethical funds offer investors the opportunity to combine their financial goals with their values by investing in companies that prioritize sustainability, ethics, and good governance. With a wide range of ethical funds available, investors have the flexibility to choose the best option that suits their investment objectives and values. By selecting the best ethical funds for 2021, investors can build a diversified portfolio that not only generates competitive returns but also makes a positive impact on society and the environment.