Throughout the 1960’s and 1970’s, waves of social movements spread across the country and across the world, making real progress in fights for civil rights, environmental protection and gun control. Later, in the 1980’s, several mutual fund companies were established to capitalize on this wave of activism, seeking to give investors (many of whom participated in these movements years earlier) a way to grow their assets while staying true to their values.

In the years to come, more so-called “socially responsible” mutual funds were established, using a variety of environment, social, and governance factors (ESG) to guide their investment choices. Many of these funds drew inspiration from various churches and other religious institutions, and were later adopted by pension funds, university endowments and individual retail investors.

It makes sense that institutions and people would want to invest their money in line with their values, and that products would emerge to help them do that. But are socially responsible investment (SRI) funds the best way to have a positive impact on the world while growing your assets?

To answer this question, we have to look inside one of these funds. The Domini Social Equity Fund, first created in 1991, is just one example of the many SRI funds available to retail and institutional investors and uses a combination of ESG screens and shareholder activism to advance its social and environmental objectives. Its top ten holdings include well-known companies such as Amazon, Alphabet (Google), Pepsico, Prudential, Apple and IBM.

I don’t know about you, but when I think about which companies are doing good in the world, Amazon (which excludes many communities of color from prime same-day delivery service and abuses temporary workers at many warehouses) and Pepsi (which sources palm oil from plantations under fire for human rights abuses) don’t come to mind. And though these companies may pass the fund’s screens against climate change or weapons manufacturing, it would be hard to argue that these companies are actively working to improve the world. It’s also important to note that transactions on the secondary market (where investors sell to each other) rarely impact corporate practices.

Across the wide array of available SRI funds, returns vary, even when funds use the same index as a benchmark. Some funds, like the Domini Social Equity Fund, have under-performed relative to the S&P 500 over the last 10 years, while others, like the Parnassus Core Equity Fund, have over-performed. Of course, historical results do not guarantee future performance, and all asset classes have over-performers and under-performers during any given time frame.

Something else to consider when evaluating an SRI fund are the associated fees and expenses. Domini’s 1.14% and Parnassus’ .88% expense ratios are well above the asset-weighted average for all mutual funds. Over the long term, these higher fees can have a huge impact, costing investors thousands of dollars in the long-term.

I’m not suggesting that values-based investors (including myself) abandon SRI funds entirely. But it’s critical we all understand how our investments do or, in many cases, do not have an impact on the world. For those of us who want to put our assets to good use and support progressive social change, let’s stop thinking just about how to own a socially-responsible portfolio, and start thinking about how to live a socially-responsible life. That may start with considering about how much time you can spend volunteering with community organizations and political campaigns. And for others, you may want to change your household budget to include significant charitable contributions to organizations having an outsized impact in your community.

There’s no one-size-fits-all answer to the question of how to live responsibly, and while there are limited options for how to invest responsibly, there are infinite ways to live our lives in ways that improve our communities and the world. To figure out what might be best for your life and financial situation, schedule an initial conversation with a financial planner today!

Historical results do not guarantee future performance. The information in this blog post did not take into account your individual financial situation or needs.