Values and Value: Making a Difference and a Profit

While Benzinga mostly covers actionable trading ideas and news stories, we've decided to delve a bit deeper into personal finance. The team at Benzinga would like to assist readers with not just their investing endeavors, but their financial lives as a whole. And today, we continue this effort with a discussion of investing both for principle and profit. Throughout history, most investors have focused solely on profit. However, it has become increasingly common to vote with one's dollars not only at the cash register, but in the stock market. From the most radical progressives to the staunchest conservatives to just about everyone in between, many are now aligning their investments with their principles. How are they doing so? Shareholder Advocacy As the term implies, shareholders own a share of each business they invest in. With that comes a voice in how they operate. For example, As You Sow, a group that promotes “environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies”, successfully pressured Best Buy BBY to launch an e-waste recycling program in 2009 via a shareholder initiative. Related: Bond Funds with Positive Impacts: What Kind of Investor Are You? Community Investing According to Investopedia, community investing involves, “Investments made directly into low-income or disadvantaged communities through channels such as community development banks, credit unions, loan funds and microfinance institutions.” Doing so, per Investopedia, places “less of a strain on federal social welfare programs, while at the same time increasing the gross domestic product and other aggregate measures of wealth and production.” Investors can invest in communities by purchasing CDs from community development banks or through offerings from community development loan funds and venture funds, as notes Investopedia. Screening Positive screening involves investing in companies that match one's specific values. For example, an environmentalist could add companies like Whole Foods WFM and IBM IBM to her portfolio, since both have been ranked highly for their environmental commitment in recent years. On the other hand, investors can negatively screen companies, weeding out those that conflict with their beliefs. For example, a labor activist might refuse to invest in Wal-Mart WMT due to its shaky history on labor issues. Values-Based Investing Via Mutual Funds If you're not interested in purchasing stocks directly, numerous mutual fund companies offer a significant array of values-based investments. Examples include:

• Environment: Green Century Funds
• General social responsibility: Calvert, Domini Social Funds, Pax World Investments
• Religion: Amana Mutual Funds Trust (Islam), Ave Maria Mutual Funds (Catholicism), Guidestone Financial Resources (Christianity), Timothy Plan (Christianity)

There are plenty of others, as well, so speak with your advisor for your full range of options. Final Word Beware that values-based investors typically experience lower returns than those who invest purely for profit, largely due to decreased diversity. Whether you choose to go this route will ultimately depend on the strength of your principles versus your financial desires.