Ethical investing allows individuals to put money into companies whose practices and values align with their personal views. To that end, a number of investors are considering parking their money in socially responsible mutual funds. The consumer market has become increasingly thoughtful and interested in “ethical consumption.”
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.
3 Best Choices
We have, thus, selected three weapon-free mutual funds with a Zacks Mutual Fund Rank #1 (Strong Buy) and #2 (Buy) that are poised to gain from such factors. 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 grade A.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
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 carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.87%. The fund has three and five-year returns of 13.5% and 10.8%, respectively.
Green Century Balanced Fund (GCBLX - Free Report) seeks appreciation of both capital and income by investing in a diverse portfolio of stocks and bonds which meet standards for corporate environmental responsibility set by Green Century. The fund invests the majority of its assets in stocks and bonds of domestic companies which environmentally responsible and sustainable, and also make positive environmental contributions.
This Zacks sector - Allocation Balanced 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.
GCBLX carries a Zacks Mutual Fund Rank #2 and has an annual expense ratio of 1.48%. The fund has three and five-year returns of 8.9% and 6.8%, respectively.
Parnassus Fund (PARNX - Free Report) seeks appreciation of capital by investing in undervalued stocks. The fund’s managers believe that if such undervalued companies exhibit financial strength and offer bright prospects for the future, they would eventually bounce back, thereby increasing their market value. The fund invests in companies of any size across different market capitalizations.
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 carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.85%. The fund has three and five-year returns of 10.6% and 9.5%, respectively.
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