Conscience Fund

Ethical Fund

A mutual fund in which the asset managers make investment decisions based upon some ethical code. An ethical fund is marketed to investors who may have moral objections to certain investment vehicles or companies. For example, an individual may have a moral objection to smoking and may therefore buy shares in a mutual fund that refrains from investing in tobacco companies. Ethical funds may have positive or negative guidelines; that is, a fund's ethics may inform where it makes investments (e.g. in environmentally friendly companies) and where it does not (e.g. in arms manufacturers). See also: Green fund, Islamic finance.

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Conscience fund. Conscience funds, also known as socially responsible funds, allow you to invest in companies whose business practices are in keeping with your personal values.

For example, you can choose mutual funds that invest in companies that have exceptional environmental or social records, or that refuse to invest in companies that manufacture certain products or have certain employee benefit practices.

Each fund explains the principles it follows in its prospectus and describes the screens, or set of criteria, it uses to identify its investments.