Socially Responsible Funds
The identity of these funds depends largely on the fund manager's definition of social responsibility. Some funds steer clear of products that use animal testing; many do not invest in companies involved with the defense industry, guns, or tobacco; others concern themselves with child labor issues. Some funds use all of the above or other criteria. You need to match those investing criteria with what you consider to be socially responsible and find funds that are earning money. They are out there, but they require that you take time to look beyond the marketing and the numbers of the fund management.
When it comes to socially responsible funds, the intentions are good and the funds are profitable. However, exactly how closely any of these funds stick to their overall criteria is hard to judge, even with a concerted effort. While a company may clearly not be manufacturing weapons, it may be inadvertently polluting the environment.
Dreyfus Third Century Fund and PAX World are two of the most successful, best-known funds in this area. They look for protection of the environment and natural resources, occupational health and safety, life supportive goods and services, and companies that do not sell liquor, firearms, or tobacco products.