Green ETFs and Socially Responsible Investing

Green ETFsThe Social Investment Forum released a report last week on the latest trends in Socially Responsible Investing (SRI) which is the practice of incorporating social and environmental factors into investing.

According to the Forum’s research, investors have poured nearly $3 trillion into funds that pursue an SRI strategy, up 18% from the last study in 2005. Investors interested in Green ETFs or other SRI ETFs have several choices.

Van Eck Global’s Market Vectors Global Alternative Energy ETF (NYSEArca: GEX) tracks 30 companies worldwide that are engaged in the alternative energy industry. As of March 10, over 17% of the fund was held in Vestas Wind Systems (Copenhagen: VWS.CO), a Danish company that, according to their website, has 23% of the wind energy market and 35,000 wind turbines installed. Learn more at Van Eck’s website.

Barclay’s iShares offers two SRI ETFs. The KLD 400 Social Index Fund (Amex: DSI) tracks the Domini 400 Social Index which includes companies on the basis of their record of community relations, diversity, employee relations, human rights, product quality and safety, environment and corporate governance. Companies with material revenue from alcohol, tobacco, firearms, nuclear power, military weapons and gambling are excluded.

The iShares KLD Select Social Index Fund (Amex: KLD) tracks an index of 200 to 300 companies with good social and environmental track records. The weighting of the index is linked to the degree of a company’s social responsibility. For example, companies with relatively higher scores have a higher representation in the Index than they do in the Russell 1000® Index. Companies in the tobacco industry are excluded from the Index.

Learn more at iShares’s websites for DSI and KLD.

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