3 Leading Sustainable Responsible Investing (SRI) Funds

November 18, 2014

SRI-parentThere are now hundreds of sustainable responsible investing funds, or SRI funds, on the market. These funds seek out companies that have strong environmental, social or corporate governance (ESG) characteristics.

With so many SRI funds to choose from, it can be a challenge for investors to decide which funds to own and when to move on to other funds. NoLoad FundX can help investors invest in leading SRI funds.

We rank SRI funds along with other funds, and we own them when they’re doing well.  Three SRI funds have been doing particularly well lately, and three of these funds have earned a place in NoLoad FundX’s model portfolio.

3 Leading SRI Funds

1. Vanguard FTSE Social Index (VFTSX)

Vanguard FTSE Social Index is one of the best performing SRI funds for the 12-months ending October 31, 2014. The fund is index-based: it tracks the FTSE4Good U.S. Index, which screens the companies in the FTSE All-World USA Index on five factors:  environmental sustainability; support for human rights; good supply chain labor standards; countering bribery; and climate change. VFTSX is broadly diversified: it has over 370 positions, mostly large-cap stocks. It excludes tobacco producers or companies involved in weapons, including nuclear weapons.

VFTSX is a transaction fee at most major brokers.

2. Ariel (ARGFX)

Ariel is a lean portfolio of less than 50 small- and mid-cap companies that its managers believe are undervalued. Ariel looks for companies that have good diversity, labor and environmental practices, and the Fund also excludes companies involved in tobacco or handguns. But the Fund doesn’t simply invest in “things that do good”. The managers consider factors that they believe are the characteristics of a good business, and that a good business will ultimately be a good investment.

Ariel is available without a transaction fee (or NTF) at most major brokers.

3. Domini Social Equity (DSEFX)

Domini is an actively managed SRI fund that was most recently ranked as a Hold in NoLoad FundX. This means the fund is performing well enough to hold, but we wouldn’t add money to it at this point.

Domini evaluates company’s environmental and social record, and it also engages with companies through proxy voting and filing shareholder resolutions. Apple is one of the fund’s top 10 holdings (the Fund has roughly 20% invested in technology), and the Fund worked with Apple to institute labor and environmental standards in its overseas factories. The Fund has also met with PNC Financial Services, another of the fund’s holdings, to discuss about the financial firm’s coal investments.  Domini avoids investing in weapons, alcohol, tobacco, gambling, and nuclear power companies.

Domini Social Equity is available without a transaction fee (or NTF) at most major brokers.

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