Green Mutual Funds

Green mutual funds are a subsection of the socially responsible mutual fund sector. They limit all of their investments to companies that actively pursue environmentally friendly business practices and purposes. Some of the industries that are included in green mutual funds are energy generation using renewable or clean power sources such as wind or solar in order to reduce pollutants and companies that produce products that help us to be more environmentally friendly, such as biodegradable storage containers, solar panels or windmills. Many of the alternative energy mutual funds that are available on the market could be considered green mutual funds.

Even though many of the green mutual funds have been available for quite some time the sector itself is relatively new and there are relatively few participants. Since there are so few funds and many of them don't have an established track record they need to be evaluated on short-term performance as there is no real benchmark to grade them against. Many people judge green mutual funds based on the individual companies that they invest in and their potential for long term performance. As green mutual funds become more popular I expect more investment houses to offer them and we should begin to be able to make comparisons in the near future.

Most finance companies that sell mutual funds do not have a seperate listing for green mutual funds. They will usually be listed under their socially responsible mutual funds. Many of the stocks that are purchased by green mutual funds show a high degree of correlation to the stock market as a whole, so don't expect them to offer a great degree of diversification.

If you aer looking for ways to earn some profit while protecting the environment you should consider investing in green mutual funds.