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Make Beaucoup Money With These 4 Socially Responsible Funds
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At a time when the coronavirus pandemic is sending ripples across funds of all categories, sustainable funds appear to be largely unaffected. Per Morningstar, 70% of sustainable equity funds in America ended in the top half of their categories in the first quarter of this year.
How did sustainable funds manage to outperform their peers? Such funds generally have little to no exposure to sectors, such as energy, hurt the most by the pandemic. Moreover, these funds are heavy on tech stocks which have by far been the best performers amid widespread market uncertainty.
Social investing takes into account financial returns from investment as well as social/environmental benefits of the same. While such funds cater to investors’ ethical investment appetite, there are many reasons why investing in such funds would rake in big gains. Let’s have a look.
Clean Energy Investment is the Next Big Thing
Cashing in on the upcoming trends in the market is what fetches higher-than-average returns. Investors always have a keen eye for “the next big thing.” Having said that, clean energy is an area where investment opportunities are aplenty. The space has the potential to be a growing global economic force while providing spectacular returns.
Moreover, in the past few years, investors divested at least $6 trillion of assets from fossil fuel funds. Fossil free funds, on the other hand, bear minimal climate risk. Growing awareness about burning environmental issues and mitigation measures have made low-carbon as well as renewable energy sectors attractive to its investors. Keeping such benefits in mind, investing in clean energy mutual funds seems prudent.
According to Fossil Free Funds and Morningstar, the top three fund families, American Funds (10%), Vanguard (9%) and Fidelity (8%), in terms of assets under management have the lowest exposure, not more than 10%, to fossil fuel stocks. The total number of Vanguard mutual funds and exchange-traded funds that have no exposure at all to fossil fuels stocks stands at nine.
Let’s look at two mutual funds focused on clean energy companies with a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns.
New Alternatives Fund Class A (NALFX - Free Report) fund invests in companies that contribute to a sustainable environment. The fund seeks long-term capital growth with income as its secondary objective. The fund primarily invests in common stocks of companies and even in other equity securities such as real estate investment trusts and American Depository Receipts etc.
This Zacks sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
NALFX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.08%. The fund has three and five-year returns of 8.9% and 6.2%, respectively.
Fidelity Select Environment and Alternative Energy Portfolio (FSLEX - Free Report) fund aims for capital appreciation. The fund invests the majority of its assets in securities of companies that provide business services related to alternative and renewable energy, energy efficiency, pollution control, water infrastructure, waste and recycling technologies or other environmental support etc.
This Zacks sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSLEX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.85%. The fund has three and five-year returns of 0.7% and 4.9%, respectively.
Weapon Free Funds for Ethical Investors
Lately, many have expressed concerns about being indirectly invested in gun and weapon makers through mutual funds. A number of petitions have been signed as protests against militarism and relaxed gun laws. At a time when defense stocks have performed well, ethical investors are increasingly choosing to go weapon-free. For investors vexed by the rising violence and bloodshed, there are weapon-free mutual funds to consider.
How to Screen Low Weapon Risk Funds?
Weapon Free Funds calculate the total number of flagged holdings in a fund’s portfolio by taking into account the total amount and percentage of a fund’s assets invested in such companies.
Further, Weapon Free Funds categorizes mutual funds into three screen groups, viz., military weapons, civilian firearms, and both military and civilian weapons combined. After closely monitoring the funds, they are awarded one of the following weapon grades:
A – The fund has no direct investments in military weapon manufacturers, civilian firearm manufacturers or civilian firearm retailers.
B – The fund has direct investments in civilian firearm retailers but not in military weapon manufacturers or civilian firearm manufacturers.
F- The fund is invested directly in military or civilian weapon manufacturers, the likes of which include major military contractors and weapon manufacturers.
We have selected three weapon-free mutual funds with a Zacks Mutual Fund Rank #2 that are poised to gain. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000 and each of these funds carries a weapon gradeA.
Parnassus Core Equity Fund - Investor Shares (PRBLX - Free Report) seeks to surpass the performance of the S&P 500 by capturing more of the market upside than the downside. PRBLX invests in large-cap companies which have long-term competitive advantage and positive performance on ESG criteria.
This Zacks sector - Large Cap Value product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRBLX has an annual expense ratio of 0.86%. The fund has three and five-year returns of 9.8% and 9.1%, respectively.
Parnassus Mid Cap Growth Fund - Investor (PARNX - Free Report) seeks appreciation of capital by investing the lion’s share of its assets in mid-sized growth companies. The fund may also invest up to one-fifths of its total assets on smaller- and larger-capitalization companies.
This Zacks sector - Sector- Large Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PARNX has an annual expense ratio of 0.84%. The fund has three and five-year returns of 4.6% and 6.1%, respectively.
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Make Beaucoup Money With These 4 Socially Responsible Funds
At a time when the coronavirus pandemic is sending ripples across funds of all categories, sustainable funds appear to be largely unaffected. Per Morningstar, 70% of sustainable equity funds in America ended in the top half of their categories in the first quarter of this year.
How did sustainable funds manage to outperform their peers? Such funds generally have little to no exposure to sectors, such as energy, hurt the most by the pandemic. Moreover, these funds are heavy on tech stocks which have by far been the best performers amid widespread market uncertainty.
Social investing takes into account financial returns from investment as well as social/environmental benefits of the same. While such funds cater to investors’ ethical investment appetite, there are many reasons why investing in such funds would rake in big gains. Let’s have a look.
Clean Energy Investment is the Next Big Thing
Cashing in on the upcoming trends in the market is what fetches higher-than-average returns. Investors always have a keen eye for “the next big thing.” Having said that, clean energy is an area where investment opportunities are aplenty. The space has the potential to be a growing global economic force while providing spectacular returns.
Moreover, in the past few years, investors divested at least $6 trillion of assets from fossil fuel funds. Fossil free funds, on the other hand, bear minimal climate risk. Growing awareness about burning environmental issues and mitigation measures have made low-carbon as well as renewable energy sectors attractive to its investors. Keeping such benefits in mind, investing in clean energy mutual funds seems prudent.
According to Fossil Free Funds and Morningstar, the top three fund families, American Funds (10%), Vanguard (9%) and Fidelity (8%), in terms of assets under management have the lowest exposure, not more than 10%, to fossil fuel stocks. The total number of Vanguard mutual funds and exchange-traded funds that have no exposure at all to fossil fuels stocks stands at nine.
Let’s look at two mutual funds focused on clean energy companies with a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns.
New Alternatives Fund Class A (NALFX - Free Report) fund invests in companies that contribute to a sustainable environment. The fund seeks long-term capital growth with income as its secondary objective. The fund primarily invests in common stocks of companies and even in other equity securities such as real estate investment trusts and American Depository Receipts etc.
This Zacks sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
NALFX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.08%. The fund has three and five-year returns of 8.9% and 6.2%, respectively.
Fidelity Select Environment and Alternative Energy Portfolio (FSLEX - Free Report) fund aims for capital appreciation. The fund invests the majority of its assets in securities of companies that provide business services related to alternative and renewable energy, energy efficiency, pollution control, water infrastructure, waste and recycling technologies or other environmental support etc.
This Zacks sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSLEX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.85%. The fund has three and five-year returns of 0.7% and 4.9%, respectively.
Weapon Free Funds for Ethical Investors
Lately, many have expressed concerns about being indirectly invested in gun and weapon makers through mutual funds. A number of petitions have been signed as protests against militarism and relaxed gun laws. At a time when defense stocks have performed well, ethical investors are increasingly choosing to go weapon-free. For investors vexed by the rising violence and bloodshed, there are weapon-free mutual funds to consider.
How to Screen Low Weapon Risk Funds?
Weapon Free Funds calculate the total number of flagged holdings in a fund’s portfolio by taking into account the total amount and percentage of a fund’s assets invested in such companies.
Further, Weapon Free Funds categorizes mutual funds into three screen groups, viz., military weapons, civilian firearms, and both military and civilian weapons combined. After closely monitoring the funds, they are awarded one of the following weapon grades:
A – The fund has no direct investments in military weapon manufacturers, civilian firearm manufacturers or civilian firearm retailers.
B – The fund has direct investments in civilian firearm retailers but not in military weapon manufacturers or civilian firearm manufacturers.
F- The fund is invested directly in military or civilian weapon manufacturers, the likes of which include major military contractors and weapon manufacturers.
We have selected three weapon-free mutual funds with a Zacks Mutual Fund Rank #2 that are poised to gain. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000 and each of these funds carries a weapon gradeA.
Parnassus Core Equity Fund - Investor Shares (PRBLX - Free Report) seeks to surpass the performance of the S&P 500 by capturing more of the market upside than the downside. PRBLX invests in large-cap companies which have long-term competitive advantage and positive performance on ESG criteria.
This Zacks sector - Large Cap Value product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRBLX has an annual expense ratio of 0.86%. The fund has three and five-year returns of 9.8% and 9.1%, respectively.
Parnassus Mid Cap Growth Fund - Investor (PARNX - Free Report) seeks appreciation of capital by investing the lion’s share of its assets in mid-sized growth companies. The fund may also invest up to one-fifths of its total assets on smaller- and larger-capitalization companies.
This Zacks sector - Sector- Large Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PARNX has an annual expense ratio of 0.84%. The fund has three and five-year returns of 4.6% and 6.1%, respectively.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>