Investing: The Feel-Good Funds

INVESTORS ARE POURING INTO SOCIALLY RESPONSIBLE FUNDS. DO THEY KNOW WHAT THEY'RE GETTING?

Investors seeking to make money with a clean conscience are flocking to socially responsible mutual funds, which invest in companies that meet nonfinancial standards like environmental friendliness and respect for workers' rights. Assets in such funds have jumped 156% over the past five years, to $31.9 billion, while the fund industry as a whole has grown just 22%, according to fund tracker Lipper. But a recent study by environmentalist Paul Hawken suggests investors might be getting more than they bargained for. Hawken, who runs the Natural Capital Institute in San Francisco, found socially responsible funds owning companies like Iraq-entangled Halliburton, tobacco-products...

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