Green Mutual Funds: The Natural Elements Are Your Best Friends

What you will find when making a decision about green mutual funds is that some are more precisely targeted than others. These funds' advantage is that, for the average investor, they offer a means of getting into carbon-aware investing which is still quite newly fledged. A useful working definition of a green mutual fund is one that invests in spheres of activity which directly enhance the environment. Thus, one finds funds perfectly prepared to embrace companies which are green in terms of keeping their carbon footprint small.

Within the classification, shades and nuances exist. 'Green' can mean for one investor 'ethical', for another 'socially responsible', while a third person might apply it purely and simply to clean energy. With non-renewable resources rapidly running out, alternatives like wind turbines for electricity and geothermal heat are welcomed by many. A fund may invest, for example, in the water sector where water treatment and filtration, or the manufacture of the machinery to achieve this, may be the company's goal. While contributing to a cleaner future, green companies large and small are also in many cases reassuringly profitable. Funds apply their own set of criteria to determine the eligibility of a given company for inclusion in the fund.

Managers are employed to keep abreast of the figures and performance of companies invested in. Drawing on such natural resources as wind, sunlight, rain and geothermal heat, renewables have been slowly carrying out the majority of the world's 'greening'. Similarly, biofuels like bioethanol have been powering vehicles for years. While biodiesel and ethanol are now quite firmly established, liquid propane gas occupies a market share in Australia. Numerous evolving markets around the world continue to create a huge demand for alternatives to go into the one's gas tank.

Managers of Green Mutual Funds screen the stocks, hand-picking ones with better environmental profiles. In general, green mutual funds are intended for the type of investor who enjoys dabbling in the stock market, but passively. Green building materials and products, metal recycling and water conservation are all further viable activities. Intending investors may be drawn to the types of green development that appeal to them personally. Green funds can also embrace companies carrying out desalination of sea water, as well as others manufacturing wind turbines. The fund is normally made up of a basket of inter-connected investments that involve companies which in different ways promote environmental stewardship. With green mutual funds, returns do fluctuate, and investors need to bear this volatility in mind.

What makes these funds appealing to many is their pleasingly fuss-free liquidation terms. Food suppliers who have the mantra of exclusively sourcing local sustainable raw foodstuffs are making inroads, too. Sustainable, organically-grown produce making its way to consumers via restaurants is one way that the public's increasingly expressed wish for environmentally friendly food is being met.