Socially Responsible Investment is only an easy term to understand by an individual. SRI focuses not only on the ability of a company to make a huge profit but also on the principles held by that complaint company. The manager of a socially responsible investing only invests in companies that meet certain ethical criteria. In simple words, people who want to invest in SRI funds no need to worry about their money going to companies that provides products or services that conflict with their values.

However, you will find types of socially responsible investments available in the industry. Some examples of popular criteria we have shared below-

?             Environmental responsibility

?             Human rights

?             Religious views

?             Anti-Defense

 

If you think there are no disadvantages of SRI, continue to read our blog post here to know the drawbacks-

1. VAGUE DEFINITIONS OF SRI.

The criteria for socially responsible investments are very loose. Many of the Socially Responsible Robo Advisor will suggest you different ways of SRI investing in companies.

According to Charles Schwab, a fund is socially conscious if “the fund identifies itself as selectively investing supported certain non-economic principles.” This lack of clarity makes it difficult to understand if you invested within the right fund for you. The same investment could also be a socially responsible investment under one definition but not another. For example, a nuclear research company conflicts with a fund that avoids investing in militarized weapons. However, nuclear research could fall into the standards of a fund that invests only in green energy.

2. Lack of Diversification

Over the past few decades, the number of SRI funds has grown rapidly especially in the USA, these funds represent a very small number of funds available to all individual investors. However, it becomes challenging for top Robo advisors in 2021 to construct a diversified portfolio out of SRI funds alone. Even most companies who have socially responsible investment practices pretend to be smaller companies. Consequently, most mutual funds in SRI are equity funds that can be more explosive than an average fund

3. Potentially Higher Fees

Socially Responsible managers must check the extra step of making potential investments does not meet only financial criteria but also social criteria. This extra effort increases expenditure on research. Although, socially responsible funds also tend to be smaller than the actual fund, leaving fewer investors to split costs.

Still, you are planning to invest in Socially Responsible, BeniGro LLC believes that this can add value to your portfolio under the right circumstances only because, our financial advisors in Massachusetts and Robo advisors develop a socially responsible investment strategy for you. Feel free to give us a call on (833) 236-4476 to discuss whether you want socially responsible investments or financial planning to achieve your future goals. Our team is here to help you with investment or financial planning requirements!

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