Jon Sindreu and Sarah Kent
The Wall Street Journal
Originally posted September 1, 2018
In life, ethics are in the eye of the beholder. In investing, ethics are up to the whims of your fund manager.
With little regulation governing what a fund manager can call a “socially responsible” or “ethical” investment, a myriad of bespoke standards have popped up. Increasingly, these fund strategies are designed to beat the market rather than uphold morality.
This has created a dizzying of array possibilities when it comes to what these funds might hold. Fund companies can craft their definitions in such a way that they can simply rename existing products with an ethical allusion, without having to change their fund holdings.
Fund managers have rebranded at least two dozen existing mutual funds over the past few years, adding terms such as “sustainable,” and “ESG”—which stands for environmental, social and corporate governance, an industry buzzword.
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