Millennials have led the way in investing in companies that make an effort to protect the environment and society. Known as “impact investing,” this𒁏 approach has spread beyond the millennial generation to baby boomers and older investors.

Impact investing is not a new concept, but the trend has become so popular that many mutual funds are specializing in principle-based investing. This is often measured by attention to ESG–澳洲幸运5♎官方开奖结果体彩网:environment, s𒆙ocial, and governance criteria. The idea is to find investments that help people and the planet, and that have a reasonableಌ wage spread between executives and employees.

We've selected five mutual funds that specialize in impact investing based on their commitment to ESG screening and their ability to produce positive year-to-date returns. All figures are current as of Oct. 25, 2022.

1. Parnassus Endeavor Investor (PARWX)

The focus of this fund is on companies that have good work environments for employees. The purpose of this focus is to support employee well-being and find companies that are superior competitors because of better employ🐭ee retention.

Parnassus Endeavor Investor tends to look for companies it believes are undervalued and seeks to realize 澳洲幸运5官方开奖结果体彩网:capital appreciation by investing in these companies. PARW🅘X avoids firms that are involved in alcohol, gambling, tobacco, or other “vice” industries, as well as fossil fuel companies.

Parnassus uses advanced techniques for ESG screening to establish its universe of companies to choose from, then narrows its selection to 30 or 40 companies with strong 澳洲幸运5官方开奖结果体彩网:fundamentals. The fund ha꧙s an average yield of 14.0% 🀅over a five-year period.

• YTD Return: -18.93%
• Expense Ratio (net): 0.94%
• Morningstar Rating ★★★★★
• Morningstar Risk Rating: Above average
• Net Assets: $4.4 billion
• TTM Yield: 1.98%

2. TIAA-CREF Core Impact Bond Retail (TSBRX)

This fund seeks income and capital appreciation at the same time. Approximately 80% of the fund’s assets are in bonds of companies that meet ESG standards. Note that the fund invests in municipal bonds and U.S. 澳洲幸运5官方开奖结果体彩网:government bonds in addition to corporate bonds. It may also buy 澳洲幸运5官方开奖结果体彩网:mortgage-backed securities.

TSBRX has a target of 10% of its assets in socially and environmentally positive companies. It may invest in affordไable housing, community development, sustainable energy, or natural resources.

The other 90% of the portfolio may not pass the ESG test, so this fund is for those who can accept some focus on impact ﷺinvesting while seeking returns from more traditional companies.

• YTD Return: -17.86%
• Expense Ratio (net): 0.64%
• Morningstar Rating ★★★
• Morningstar Risk Rating: Above average
• Net Assets: $5.8 billion
• TTM Yield: 2.21%

3. Vanguard FTSE Social Index I (VFTNX)

This fund eliminates alcohol and tobacco companies, as wel💟l as nuclear power companies and firms that sell to the military. Stock screeners demand workplace diversity, with a minimum of one woman🅰 on the board of directors and no human rights violations.

Out of some 400 stocks, the top three holdings are Apple, Microsoft, and Alphabet, and overall, the holdings have a strong representation of healthcare and technology companies. The fund has beaten the S&P 500 by nearly 1%ܫ per year on average.

• YTD Return: -24.35%
• Expense Ratio (net): 0.12%
• Morningstar Rating ★★★★
• Morningstar Risk Rating: Above average
• Net Assets: $12.2 billion
• TTM Yield: 1.42%

4. Boston Trust Walden Equity (WSEFX)

Walden is willing to♑ invest in any size company but tends to have large corporations in its portfolio. Money managers screen companies according to ESG guidelines.

That said, the company does own McDonald’s and Conoco ꦛPhillips, as well as Nike, three companies that present probജlems for some impact investors. The fund will not invest in weapons, nuclear plants, or alcohol or tobacco companies.

Returns have beaten the S&P 500 consistently for five years. It keeps at least 80% of its assets in equity securities and focuses﷽ on large-cap companies. 

• YTD Return:  -16.33%
• Expense Ratio (net): 1.00%
• Morningstar Rating ★★★★
• Morningstar Risk Rating: Below Average
• Net Assets: $232 million
• TTM Yield: 0.43%

5. Domini Impact Equity Investor (DSEFX)

This fund has the highest 澳洲幸运5官方开奖结果体彩网:expense ratio on our list. It invests in mid-cap and large-cap companies and may invest in companies outsꦍide of the United States. The fund also invests in futures and options.

Domini has established its own social and environmental criteria for measuring companies. In addition to ESG screening, the fund looks for companies that are involved in their communities, support employee well-being, and show concern🔴 for ecosystems.

The fund has created its index of companies from which to choose and has successfully kept up with the returns of✨ the S&P𒉰 500.

• YTD Return: -26.16%
• Expense Ratio (net): 1.09%
• Morningstar Rating ★★
• Morningstar Risk Rating: Below Average
• Net Assets: $815.9 million
• TTM Yield: 0.05%

The Bottom Line

Mutual funds are moving quickly to create products for impact investors. But as you can see from the descriptions of the fun♎ds on this list, you must carefully weigh what each one considers to be socially responsible investing. Some of the funds put a small percentage of assets into impact investing, while others dedica🌞te a complete portfolio of responsible companies.