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The Importance Of Ethical Investment

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Register to read the introduction… A Portfolio manager’s role in the mutual fund is to maximize the wealth of the investors, through investment of assets in stocks of corporations. Every citizen/corporation has a social responsibility towards the society in which he lives in. Similarly mutual funds have a responsibility towards the society in which it operates. By investing on companies, investors seek to promote the growth and development of the company in anticipation of good results. They thus play a role in promoting the activities of the corporation towards making profits. For example in emerging markets, many large retailers employ children to make garments. By investing in such a retail company the investor is providing the necessary funds to promote child labor- an issue most often opposed in the society. Thus an investor is also socially responsible to the society through the investment he makes. Thus ethical investment is sometimes also referred to as “socially responsible investment …show more content…
The advantage of this form of investment is that investors will be able to make a direct positive impact on the society. The investor’s money is used to improve the society and various problems that it faces like rural poverty, declining public health, providing affordable housing etc. The organizations that put the community investment capital to work are collectively known as Community Development Financial Institutions. (CDFIs). The minimum investment that is required is normally very low (approximately $1000 in the United States) with returns in the range of 0 to 5%. These institutions lend money to those places where local banks do not. The investments are made in only those places that have a great social impact at an affordable rate after due diligence is made on the capacity of the …show more content…
Are people who invest in SRI funds more socially responsible than the rest of the investors? If yes, do people who invest in SRI funds not invest in other non-ethical funds. Given that SRI funds are those that grant higher returns over a longer time frame are investors willing to risk their money for the cause of social responsibility? A majority of participants in the financial markets are those who earn the average basic pay in the industry. Their primary goal is wealth maximization and they would most likely be indifferent towards the nature of the fund. Even if these investors are socially responsible they would like to protect the capital invested. The SRI funds typically do not provide diversification benefits. In such a case a majority of participants would seek to invest in both a SRI fund and a non-ethical fund to protect his

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