Investment trends come and go, but ethical investing is one that’s likely here to stay. With a growing global focus on sustainability and corporate responsibility, it’s become a vital strategy in the development of modern portfolios.

Here’s how aligning investment choices with personal values can both foster a better world and lead to better financial returns.

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What is Ethical Investing?

Ethical investing, also known as socially responsible investing (SRI) or impact investing, involves selecting investments based on ethical and social criteria. Rather than considering financial impact alone, it looks at companies and funds that demonstrate a commitment to things like environmental stewardship and consumer protection.

This type of investment is especially popular with younger generations. In fact, according to a 2022 study, 70% of investors between 18 and 41 were very concerned about environmental issues, highlighting the growing emphasis on sustainable investment practices.

The Core Principles of Ethical Investing

  • Environmental Protection: Supporting businesses that implement sustainable practices and contribute to the preservation of our planet. 
  • Social Responsibility: Investing in companies that have positive labor practices, promote human rights, and support community development.
  • Corporate Governance: Favoring organizations that exhibit transparent and ethical management practices.

These three pillars (ESG) uphold a framework designed to shift the focus from pure profitability to long-term growth and sustainability. 

Why Consider Ethical Investing?

So what’s in it for me, you might ask. Investing ethically is all fine and well, but how can it help me grow my wealth? For one, ESG funds proved exceptionally resilient during market downturns like the 2008 recession and can serve as a buffer against future volatility. 

Smart investors understand the importance of diversifying their portfolios, and what better way to mix things up than including a few ethical funds?

Ethical investing also promotes corporate responsibility, incentivizing businesses to help the wider world—including their own investors. As they say: what goes around comes around, and this couldn’t be more true when it comes to investing. 

The Different Types of Ethical Investing

What matters most to you? How about your core values? What sort of legacy do you hope to leave behind? Answering these questions can help you identify relevant ethical funds to invest in. Here’s a look at some of the most popular types.

Environmental Funds

If environmentalism is your thing, look into companies that prioritize eco-friendly practices. For example, you might choose a business with promising renewable energy projects like solar and wind power. 

Environmental funds avoid companies involved in polluting industries, such as fossil fuels. The goal is to support the growth of enterprises with minimal ecological impact or that actively contribute to environmental sustainability.

The iShares Global Clean Energy EFT (ICLN) provides valuable insight into companies producing renewable energy. It currently has about 100 holdings and offers a 5-year return of 8%. Top holdings include First Solar and Vestas Wind Systems.

Social Justice Funds

Social justice funds address all sorts of human rights, including fair labor practices. You can invest in companies that support efforts like gender equality and community development. These funds typically exclude companies that profit from weapons and other types of social harm.

Faith-Based Funds

If faith is an important part of your life, you might consider investments that align with your religious values and guidelines. For example, if you are Muslim, you might avoid funds dealing with alcohol or pork-related products. 

Amana Growth and Eventide Gilead are among the largest faith-based funds, totaling over $7 billion between them. These types of funds are quickly gaining momentum, so if you’ve ever considered investing in a religious fund, now is the perfect time to get started.

Governance Funds

These are similar to social justice funds in that they favor businesses with strong governance practices, like transparent accounting methods and fair wages for employees. Companies like these are less likely to encounter legal troubles or reputational damage, which can result in better financial outcomes for investors.

Integrating Ethical Investing Into Your Portfolio With Alpha Wealth Funds

At Alpha Wealth Funds, we believe that a well-crafted investment strategy is key to achieving your financial goals while staying true to your values. Our investment products can be tailored to include ethical investment options.

To create personalized investment strategies that reflect each client’s ethical preferences, goals, needs, and risk tolerance, we consider factors such as:

  • The client’s values and areas of concern (climate change, social justice, etc.)
  • Financial objectives and the desired balance between investment growth and ethical impact.
  • Risk assessment to ensure the ethical investments are suited to the client’s risk profile.

We are committed to providing educational content to our clients on crucial financial topics, including ethical investing. Our knowledgeable team is dedicated to helping you invest responsibly while navigating different financial challenges and stages of life.

To learn more about ethical investing and how it can be integrated into your modern portfolio, be sure to subscribe to our newsletter via our client portal. 

That way, you can stay updated on market trends, financial planning strategies, and investment insights that matter to you. 


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PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. All investments involve risk, including the loss of principal.