Green Mutual Funds And Etfs

Aside from buying stock directly in green businesses

, investments such as green funds are now popular among investors who want to turn a profit while being concerned about their investment's effect on the environment. Green investments of this sort include green mutual funds or exchange-traded funds.

Green mutual funds are mutual funds wherein investments are pooled towards profiting from businesses that support or benefit the environment by way of services or products that leave small carbon footprints or environmentally sustainable business practices. The investment manager of the mutual funds distributes green assets based on the prospectus of the funds. These green mutual funds work similarly to conventional mutual funds, wherein the manager puts the pooled investments in bonds, stocks, or other tools. Investors also obtain profits which are proportional to their investments. Green ETFs, on the other hand, usually trade like stocks in exchanges, although these track indices containing companies or businesses that support the environment.

There are varying definitions of environment-friendliness when it comes to green funds. There are some green investment funds which buy stock in companies that adopt environmentally conscious business models. Other green funds invest solely in businesses that directly develop biofuels or use geothermal energy, which help lower their carbon footprint and make resources more efficient. Due to the lack of hard and fast definitions of what "green" is, investors who want to make a difference in the world around them should study the stock filings and prospectus of green funds before they invest.

Investing well shouldn't only mean that you obtain enough money to live on for retirement and establish measures to ensure that your wealth is protected - you should also factor in what you leave behind for future generations, financially and environmentally. To know more about green ETFs and mutual funds, contact your investment advisor.

by: Carina Smith

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