Mutual funds are a type of investment scheme wherein the money is gathered from many different individuals and entities. The pooled funds are then placed in various investment vehicles, with the aim of yielding considerable profits. Green mutual funds differ from regular mutual funds are managed with making a positive contribution to the environment in mind.
Mutual funds have become a popular means of investing one’s money as it provides a good balance between risk and yield. By pooling together money from various investors, a larger amount is at the disposal of the investment manager. With a larger amount, the investment vehicles can be diversified more, lowering the risk that is associated with dumping all the funds into one investment. Mutual funds are therefore perfect for people who prefer to be a little more aggressive but who still want a degree of certainty.
Over the years, social and environmental awareness have reached new heights, and even businesses have engaged in practices that involve giving back to the community and the environment. This is where the idea of green mutual funds was born. Green mutual funds involve discussion with companies, determining if they are truly green. Oftentimes, the investments go to companies such as clean energy companies, recycling companies, companies that engage in ecologically friendly practices, and so on.
It is rather important to realize that not all products being touted as green mutual funds are truly green. With the popularity of this product going up, more and more are claiming to be green. It is thus left to the investor to ensure that he is really engaging in green mutual funds and not being deceived.