Like a lot of my peers I am very eco-minded and conscientious about the environment. Also unlike my peers I know that money can grow on trees if you know where to invest.
At the moment there are several options for ‘green investments’, whose purposes are to make profits from supporting green projects while also supporting the environment, either in a green mutual fund or in a number of green stock market indexes. These green investments may incorporate efforts to reverse the effects of global warming, increase the pace of sustainable development and support reforestation projects.
There are various types of green investments, of those I have listed the most profitable below:
Bonds – a new category in green investing, green bonds actually produce funds for eco-friendly enterprises. An attractive feature to this type of investing is that tax exempt income may be awarded to this fixed income instrument as the money provided for these green projects often come from governments.
Forestry Investments– Investments in forestry have been becoming more popular and it is no wonder why when they have been outperforming stocks and shares and have been steadily rising in value for three hundred years.
A favourite of Jeremy Grantham, according to him forestry is a “brilliant store of value should inflation unexpectedly run away, and a historically excellent defensive investment should the economy unravel.” Popular forestry management specialists include, The Phaunus Timber Fund, Greenwood Management and Cambium.
ETFs and Mutual Funds – Placing money in a pool of securities grant average investors a cost-efficient method to diversify their portfolio in various industries and sectors. The popular green mutual funds are Green Century balanced (GCBLX), Portfolio 21 (PORTX), equity (GCEQX) funds, as well as the Winslow Green Growth Funds (WGGFX).
Before you get too carried away I should caution you to be careful when establishing your green portfolio. Make sure you steer clear of companies overemphasising their green credentials and assess the business’ financial performance. Also look for investments that complement your environmental criteria. It is important to make choices that characterise your values while making your funds grow.
A typical and efficient strategy to weigh up an investment is to match it against a benchmark. These could be the S&P 500 and Dow Jones Industrial Average (DJIA) among others. In particular a new index was launched in 1990 called the Domini 400 Social Index. This index incorporates firms that work with specific standards for environmental and social responsibility. It is used in general to benchmark or evaluate the performance of a green mutual fund.
The Forestry Investment Blog is sponsored by Greenwood Management. For more information on investing in Forestry please click here.
August 31st, 2010 at 7:28 PM
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