Socially responsible mutual funds are an extreme example of asset gatherers using your values and neediness to turn you into a profit center for them. Socially responsible funds buy companies that they deem good corporate citizens or that follow certain religious or moral guidelines. They tend to avoid tobacco stocks, companies that discriminate or do not hire union workers, firearms and weapons manufacturers, and companies that pollute the environment.

While you are under the illusion your money is doing good, mutual fund companies operate on the hard fact that socially responsible fund investors do not trade funds and have low standards for investment return. These funds all buy the same stocks and produce the same mediocre returns, but their asset bases grow steadily. In recent years, socially responsible funds have been among the fastest growing asset gatherers. More importantly, your investment does not go directly to the company doing “good.” Your cash is used to buy shares from other stockholders who are tired of the company. A direct investment in a socially responsible enterprise or in a public offering of new shares is rare. When you discover that your money is enriching fund managers, not you or your causes, you may feel betrayed. If stocks are outside your comfort zone, you will feel better giving directly to the endeavor you support and investing the rest of your funds within your comfort zone.