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Make money off of feel-good investing

June 27, 2011: 7:40 PM ET

(Money magazine) -- Bad corporate behavior isn't exactly in short supply. If you want to find the good guys, you need a little help.


Invest in just one fund: Pax World Balanced (PAXWX) (three-year annualized return: 0.6%), known for steady management. It stashes about 30% of assets in bonds and 70% in stocks that follow sustainable practices, such as environmental and workplace safety.

Time it takes: Mere minutes.

How much it costs: Pax World's expense ratio is 0.96%


Seek out ETFs with very low expense ratios. Among them, Matt Hougan of IndexUniverse.com, which researches index funds and ETFs, recommends iShares MSCI USA ESG Select Index ETF (KLD) (three-year annualized return: 2.0%). It tracks a benchmark of about 250 companies with records of treating workers well, among other criteria. For the fixed-income portion, do what many socially responsible bond funds do: Focus on U.S. government and agency issues. A low-cost choice: Vanguard Intermediate-Term Government Bond Index ETF (VGIT).

Time it takes: About an hour to do the research and buy.

How much it costs: KLD's expense ratio is 0.50%; VGIT's, 0.15%.


Build a portfolio of stocks. Have very specific goals -- say, you want to invest only in companies that do business in Southeast Asia and have stellar environmental records? None of the 150 or so socially conscious funds may be a perfect match. But picking stocks on your own is tough: Investigating overseas labor policies or carbon footprints is difficult and costly, and most suppliers of such data don't sell it to individual investors. Your best bet: Hire a financial adviser who specializes in socially responsible investing (find one at napfa.org or socialinvest.org).

Time it takes: Several hours a year to meet with the adviser.

How much it costs: About 1% of assets per year. To top of page

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