Sex isn’t the only thing that sells. Politics and religion do too.
Investment firms love to appeal to the consciences and convictions of investors. Many investors want to purchase what aligns with their values and are happy to pair morality and profits however they can.
Here are a few illustrations: If you are concerned with environmental issues, there are funds packaged with stocks that do just that. They call it ESG (Environmental, Social, and Governance) investing. If you are a Christian looking to have investments that line up with the Scriptures, there are biblically responsible investment funds.
If you're all-in on President Trump or never voted for him but are looking for a potential way to possibly benefit in the near term, there are unit investment trusts that try to have stocks in sectors that may do well under his administration. Are you a Democrat? There's an ETF that allows you to invest in companies that connect with that political party's causes.
Clearly, one should invest with a conscience, but one must first understand that there's a lot of money in appealing to niches on Wall Street. We want to feel good and right about what we're investing in. Your fellow investment capitalists know this.
You also need to know something else: These kinds of investments don't always do what is advertised.
In the past, I've shown that some ESG funds have not only failed to do what they claimed to be doing in the world, but they haven't performed well either. Recently, a biblically responsible firm got in trouble with the SEC for having "misrepresented its research process, did not apply its investment criteria consistently, invested in companies that should have been excluded based on Inspire's stated investment criteria." Since the stock market doesn't care about your politics, investing (or not) based on who is the current winning political party can be dangerous too.
As you can see, the above list punches both ways—left and right. Bad behavior is no respecter of persons.
Let me be clear: This is most definitely not a knock on religious, political, and social convictions. These things should and most likely will influence decisions you make in life—investment ones too. At various times we have invested in some of the kinds of products mentioned above.
Know your biases. Know your convictions.
And be a touch cautious of moralistic marketing of any stripe, especially the ones that you may be prone to.
What we need to realize is that sometimes when investors try to do the right thing, they are being sold something else altogether.