Some may argue that investing is only about making money and scoff at the idea of socially-responsible investing. Others have a primary focus on how their money is used and will invest only in companies that comply with their personal ethics.
The best of both worlds is the chance to invest in companies that support one's ethical or personal beliefs but also happen to be strong investment vehicles; that is, offering the chance to earn good returns while feeling good about doing so.
One potential trend that falls in this category, according to Larry Edelson, editor of The Real Wealth Report, is the developing move towards "green funds" in the natural resource sector that focus on companies that are addressing environmental issues. He says, "I want you to get on board the early stages of this trend. I expect 'green funds' to outperform other funds in the months and years ahead."
Importantly, the advisor does not approach this recommended strategy from the standpoint of someone pushing an agenda. He is a long-term investor, noted for his long-standing expertise in the resource sector. Incidentally, he issued a long-term buy signal on gold at $250 an ounce and on oil at $13 per barrel.
Strong returns from socially-responsible funds are not without precedent. Edelson points to the Domini 400 Social Index, a benchmark index measuring the impact of socially-responsible screening on financial performance, which has out-performed the S&P 500 with a return of 18.54% vs. 16.95%.
He also notes that socially responsible investing assets have also climbed more than 258% between 1995 and 2005 - from $639 billion to $2.29 trillion. He says, "The same fate is about to hit the 'green' investing sub-sector within natural resources."
To participate in this trend, he recommends two funds. The first is Winslow Green Growth Fund (WGGFX), which has an expense ratio of 1.45%, no sales load, and a minimum investment of the $5,000. He notes that the fund invests in environmentally-responsible small-cap companies.
His second buy recommendation is New Alternatives Funds (NALFX), which invests for long-term capital growth in environmentally-friendly companies, by focusing on alternative energy, foods, water, and recycling.
Personally, as a strong advocate for the environment, I am glad to see vehicles such as these, which offer the potential to clean up the environment while also help your portfolio "clean up" as well.
Steven Halpern is the editor of TheStockAdvisors.com, a daily overview of the latest investment ideas from the financial newsletter community.
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