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Socially Responsible Funds?

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  • Avatar DCdoc 
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    I’m not trying to start a debate on politics. Truly. I recently read an article on how a Vanguard socially responsible fund (no non-renewable energy, gun, tobacco/vice, etc) mistakenly bought a gun stock mirroring a mistake in the benchmark it tracks in my daily reading earlier today. I’m fairly agnostic on money. I try to maximize my gains, regardless of the underlying asset. I don’t know if that makes my pragmatic or ignorant. Does anyone here invest in “socially responsible funds?”

    #238371 Reply
    CordMcNally CordMcNally 
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    I don’t but I don’t think differently for those that do. I’m not interested in them so I haven’t researched them but I’m curious where they draw the line because I would bet almost all companies do something that would be considered “socially irresponsible” by some people.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #238376 Reply
    Avatar Peds 
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    Does anyone here invest in “socially responsible funds?”

    Click to expand…

    nope.

    i am not interested in tilting my portfolio that way.

    #238377 Reply
    Liked by HikingDO, DCdoc
    Avatar Peds 
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    lol these are the top 10 of VFTAX:

    Microsoft Corp.
    Apple Inc.
    Alphabet Inc.
    Facebook Inc.
    Johnson & Johnson
    JPMorgan Chase & Co.
    Visa Inc.
    Procter & Gamble Co.
    Bank of America Corp.
    Walt Disney Co.

    all of these companies have been nothing but great towards society at all times 😒😒😒😒😒

    Avatar nephron 
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    I don’t see why anyone would care if the stocks they invested in was socially responsible.  Unless you are investing in the IPO, the money you spend buying the stock doesn’t go into funding the company, it just goes into buying the stock from someone who is selling the stock.  When the stock price goes up and you are able to sell it for more then it’s worth, the profit you make from selling the stock or the dividend that you collect from the stock just goes into your pocket and remains separate from the company.   I suppose that from a macro-perspective, if everyone stopped buying a socially irresponsible stock, the stock price would go down and the primary stock owners would suffer losses.  But the company itself would still function as it always does assuming that it still generates a profit.   If everyone agreed to not buy gun stocks but selling guns remained profitable, the company will continue to sell guns.   I would assume that even if the stock price went down, it would eventually be a bargain and market forces would drive the stock price up as more people realized that it was being discounted.   I suppose that the only advantage to socially responsible funds would be that if you assumed that people would stop doing socially irresponsible things- ie stop buying guns, purchasing cigarrettes, buying oil, etc, the companies that are engaged in these businesses would do worse in the long term.

    #238405 Reply
    Liked by GasFIRE, MPMD, DCdoc
    MPMD MPMD 
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    I don’t see why anyone would care if the stocks they invested in was socially responsible.  Unless you are investing in the IPO, the money you spend buying the stock doesn’t go into funding the company, it just goes into buying the stock from someone who is selling the stock.  When the stock price goes up and you are able to sell it for more then it’s worth, the profit you make from selling the stock or the dividend that you collect from the stock just goes into your pocket and remains separate from the company.   I suppose that from a macro-perspective, if everyone stopped buying a socially irresponsible stock, the stock price would go down and the primary stock owners would suffer losses.  But the company itself would still function as it always does assuming that it still generates a profit.   If everyone agreed to not buy gun stocks but selling guns remained profitable, the company will continue to sell guns.   I would assume that even if the stock price went down, it would eventually be a bargain and market forces would drive the stock price up as more people realized that it was being discounted.   I suppose that the only advantage to socially responsible funds would be that if you assumed that people would stop doing socially irresponsible things- ie stop buying guns, purchasing cigarrettes, buying oil, etc, the companies that are engaged in these businesses would do worse in the long term.

    Click to expand…

    that’s exactly my take.

    you’re not really funding or supporting a company by buying a stock.

    #238450 Reply
    Liked by Zaphod
    Avatar bean1970 
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    you’re not really funding or supporting a company by buying a stock.

    Click to expand…

    right, but if you are collecting dividends (which even VSTAX kicks)…. a dividend dividend is a cash payment from a company’s earnings. Dividends are announced by a company’s board of directors and distributed among stockholders. The dividends you collect are your investor’s share of a company’s profits either directly as a share holder or within a fund.  if you don’t want to collect cash from the profits of gun manufacturers, cigarettes, etc…then one has to look at where their dividends are coming from by reading the prospectus for an index or mutual fund….

    #238456 Reply
    Avatar Panscan 
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    Where do you draw the line? I bet if we really analyzed the companies within these “socially responsible” funds we could find plenty of shady stuff.

    I think the best thing to do is make as much money as you can and donate it or use it to advance your goals. That would do a lot more than picking one fund over the other.

    #238459 Reply
    Liked by CordMcNally
    Lordosis Lordosis 
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    Are there socially irresponsible funds?

    “Never let your sense of morals prevent you from doing what is right.”

    #238462 Reply
    Liked by ENT Doc
    Avatar nephron 
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    somebody should create an “evil” fund with wells fargo, Iranian oil, most of the pharmaceutical companies, and see how it performs.    I bet that it beats the index funds.

    #238473 Reply
    Lithium Lithium 
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    These kinds of “socially irresponsible” funds are out there.  VICEX is one.  I played around with it on stockcharts.com and it has underperformed the S&P 500 on any time period I cherry picked in the last 10 years (did better when I went 15+ years out).  The 1.49% ER I think is hard to overcome.

    #238476 Reply
    Avatar nephron 
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    That’s not a surprise that the evil fund would have high fees.

    #238499 Reply
    Lordosis Lordosis 
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    VICEX!  Great concept and at first thought it seems like it would do well.  Also whoever came up with the ticker deserves some credit.  However when you really consider it there is quite a bit of political risk involved.  Some changes to the law could ruin these types of companies.

    “Never let your sense of morals prevent you from doing what is right.”

    #238501 Reply
    MPMD MPMD 
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    you’re not really funding or supporting a company by buying a stock. 

    Click to expand…

    right, but if you are collecting dividends (which even VSTAX kicks)…. a dividend dividend is a cash payment from a company’s earnings. Dividends are announced by a company’s board of directors and distributed among stockholders. The dividends you collect are your investor’s share of a company’s profits either directly as a share holder or within a fund.  if you don’t want to collect cash from the profits of gun manufacturers, cigarettes, etc…then one has to look at where their dividends are coming from by reading the prospectus for an index or mutual fund….

    Click to expand…

    Sure that’s true.

    I just think you get way off into the ethical weeds here. Entirely passive and comparatively minuscule engagement with a gun company stock (as an example) doesn’t in any way endorse or support them.

    As others have said trying to create these funds would require a ton of effort and ceaseless vigilance.

    #238506 Reply
    Liked by ENT Doc
    Avatar Kamban 
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    Socially responsible is a moving target and one person’s socially responsible Jim Bean Whiskey is another person’s irresponsible. A Muslim or a Jew might consider bacon and other pork products socially irresponsible to his faith while the Christian might consider it the best thing on the breakfast menu.

    So I avoid all this nonsensical socially responsible funds and invest in index funds that buys stocks of legal companies. I do social responsibility on my own as an individual by not buying cigarettes, not drinking to oblivion, buying hybrid or electric cars and so on. I try and separate investing from personal morals.

    #238530 Reply

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