Green Fund

Green Fund

A mutual fund that invests exclusively in securities in environmentally-friendly companies. Different green funds have different methodologies for determining what constitutes an environmentally-friendly company. Some may avoid certain industries (notably oil and gas) entirely, while others may look at the environmental records of particular companies. Each green fund describes its methodology in its prospectus. It is also called an environmental fund.

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Green fund. A mutual fund that selects investments based on a commitment to environmental principles may be described as a green fund.

Not all green funds stress exactly the same values. A fund that seeks environmentally friendly businesses -- say those that use alternative fuels -- may not be concerned about what those companies manufacture.

Another fund may avoid any company in what it considers an unacceptable industry, despite the company's individual environmental record. In every case, the fund's approach is described in its prospectus.