Question

Many socially responsible funds are now available to the investor who wants to make ethical choices. The Amana fund buys stocks that comply with Islamic laws. For example, it will not invest in holdings that earn interest, which is prohibited under Islamic law. The Ava Maria fund is designed for Catholic investors, the Timothy funds for evangelicals. The Sierra Fund focuses on environmentally friendly investments while the Women’s Equity Fund chooses companies that promote women’s interests in the workplace. On average, however, these socially responsible investments earn a lower return than standard index funds that mirror the performance of a stock index, such as the Standard & Poor’s 500.

Are socially responsible funds attractive to you? Do you now, or will you in the future, use them in saving for your own retirement?

Answer 1

In the given case, socially responsible funds are available to investors wanting to make ethical choices. The A fund bought stocks which comply with Islamic laws. It has been observed that on average socially responsible investments earn a lower return than standard index funds which reflects performance of stock index.

 

Choice of funds for investment is dependent on person to person. As an investor, an individual might think on investing in funds that focus on environment friendly investments or Women’s Equity Funds, but undoubtedly not the ones which are based on religion.

 

For retirement purposes, an individual would definitely like to invest in funds that yields higher returns.

For retirement purposes, an individual would definitely like to invest in funds that yields higher returns.