NEW YORK (MainStreet) -- If you've ever bought shares of a mutual fund and silently grimaced at the prospect that it might be investing your money in unsavory ways--how do you feel about investing in Big Tobacco or oil companies or anything else that makes you uncomfortable?--then you might want to give a little thought to socially responsible investing.
This is oft-misunderstood field suffers from a great number of misconceptions. Are socially responsible investors all a bunch of hippies? Do they have to forego portfolio returns in order to put their money where their values are? What is socially responsible investing, sometimes called simply SRI, and how do people's definitions of "socially responsible" differ?
For these answers and more, we talked to Jared Peifer, assistant professor at Baruch College and expert on socially responsible investing. The author of studies on SRI and why people choose to invest this way, Peifer participated in a MainStreet Q&A on how the industry is changing and what prospective investors in SRI mutual funds should know.
When people invest in socially responsible mutual funds, do they expect to earn the same or better returns than in a typical mutual fund?
Jared Peifer: Most outsiders and financial types think that all people care about are returns on their investments, so I've been trying to find empirical evidence about why we're motivated to invest. It's not just about returns. Some of the research I'm doing in this vein has been finding evidence that in addition to being interested in returns, people are also moral actors.