Nowadays, the socially responsible investing has become a new fashion for investors.The socially responsible investing (SRI) is invest the money only based on non-financial factor especially the factor that related environment and ethical principles and regarding the profit. The reason for this is based on the improving awareness on the environment. It is used to be based on the different religious like the different culture has their belief on dealing with money. However, now it is more based on personal and social ethical convictions of the investors. Moreover, there are many SRI funds for the investors to chose in current position.
However, people might wonder that if the fund will not invest based on the financial factor than how could it make money? This is could be answered by the definition of the SRI, the fund manager will chose to invest in those for profit business like tobacco, alcohol, gambling, nuclear power, firearms and military weapons; and chose some other company which more environmental friendly, such as the lush or the body shop.
The reason for people still have problem on SRI is whether it will make return annually? This could be found through the figure announced by the company. The Appleseed fund, one of the largest SRI funds in the US has produced an annualised return of 6.2% in the five years. Moreover, it could be based on compare the difference of total returns between the MSCI KLD Social Index and the MSCI KLD USA. From the figure, it could be found that based on the graph, the total returns of the SRI is higher than the total average return.
(Source from: MSCI Inc, 2010)
Moreover, the specific details could be found as follow:
From those data above, it illustrates more detail information about the performance and the return for the SRI and the USA. It enhance the pervious figure about the SRI is higher than average return.
Overall, it could be found that SRI is a good choice for the investor, because of it combines the high ethical investment and the good return. However, some people might still insist that the belief of high risk and high return. To some extent, this was true, however, like the current situation in some industry, it could be found that it was not so ture. This could be seen from the co-manger of Appleseed said that the largest bank are operating in the massive risks, where they making profit and it more like to be a recipe for corruption, cronyism and economic disaster. If one day the risk fail, the bank will going to close or take over by the government. Therefore, as the shareholder, the value of the share might disappear, which could be worse than they expect. Hence, from my point of view, I want to make notice the benefits of the SRI will far more than other investment and it is becoming increasingly popular.
http://online.wsj.com/article/SB10001424052970204542404577158791058719100.html?KEYWORDS=Socially+Responsible+Investment
http://www.mscibarra.com/products/indices/thematic_and_strategy/esg_indices/MSCI%20_KLD_Factsheet_Nov2010.pdf
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