Green Fund

AAA

DEFINITION of 'Green Fund'

A mutual fund or other investment vehicle that will only invest in companies that are deemed socially conscious in their business dealings or directly promote environmental responsibility. A green fund can come in the form of a focused investment vehicle for companies engaged in environmentally supportive businesses, such as alternative energy, green transport, water and waste management, and sustainable living.

INVESTOPEDIA EXPLAINS 'Green Fund'

A green fund's strategy can be based on avoiding negative company criteria (businesses such as guns, alcohol, gambling, pornography, animal testing, etc.), choosing positive company criteria (environmental programs, energy conservation, fair trade, etc.), or a combination of both strategies.

Based on performance, it is not yet clear whether green funds and socially responsible investing can consistently create better returns for investors. But they do represent a proactive step toward environmental consciousness, which many investors appreciate.

Socially conscious investing is on the rise, which is due largely to increased worldwide exposure to the issue, as well as increased federal funding for alternative energy and other programs.

RELATED TERMS
  1. Sin Stock

    A stock of a company that is either involved in or associated ...
  2. Triple Bottom Line

    A phrase coined in 1994 by John Elkington and later used in his ...
  3. Green Levy

    A tax imposed by a government on sources of pollution or carbon ...
  4. Social Responsibility

    The idea that companies should embrace its social responsibilities ...
  5. Green Economics

    A methodology of economics that supports the harmonious interaction ...
  6. Ethical Investing

    Using one's ethical principles as the main filter for securities ...
RELATED FAQS
  1. Does investing in sustainable or "green" companies provide lower returns?

    To determine the kinds of returns that can be expected from investments in sustainable or "green" companies, the distinction ... Read Full Answer >>
Related Articles
  1. Mutual Funds & ETFs

    Going Green With Exchange Traded Funds

    As investors become more environmentally conscious, the exchange traded fund market is following.
  2. Mutual Funds & ETFs

    Evaluating Green Equity Investments

    Learn how to find stocks that are both eco-friendly and profitable.
  3. Personal Finance

    Go Green With Socially Responsible Investing

    Find out how morals and ethics can bring you a surprising return.
  4. Mutual Funds & ETFs

    Socially Responsible Mutual Funds

    It is possible to avoid unethical investments and still profit from mutual funds. Find out how!
  5. Personal Finance

    Go Green, Save Money

    Follow a few of these simple tips to become more "green" - and keep more of it in your wallet.
  6. Personal Finance

    Forget Green Stocks, "Green" Will Do

    More and more companies are "going green", but that term, in itself, can be subjective.
  7. Options & Futures

    Spotlight On The Solar Industry

    Before you buy into the hype, learn how the industry works and how to spot the winners.
  8. Personal Finance

    Building Green For Your House And Wallet

    The earth-smart money is on these environmentally friendly housing projects.
  9. Mutual Funds & ETFs

    How To Apply Technical Indicators To Mutual Funds

    Mutual funds do not readily lend themselves to technical analysis, but investors can use common indicators to evaluate mutual funds as easily as stocks.
  10. Professionals

    Should Investors Nix Actively Managed Funds?

    Index fund returns are on a tear but does this mean investors should nix actively managed funds?

You May Also Like

Hot Definitions
  1. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  2. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  3. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  4. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  5. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  6. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
Trading Center