Terror-Free Investing

Terror-free investing is an investment strategy that excludes companies with direct or indirect ties to countries or organizations that support terrorism. This ethical investment approach is driven by social responsibility, aiming to ensure that investors’ money does not fund activities linked to terrorism or human rights violations. It involves screening portfolios to exclude companies operating in countries sanctioned for sponsoring terrorism.

Example

An investor chooses a terror-free mutual fund that excludes companies doing business in countries like Iran or North Korea, which are designated as state sponsors of terrorism.

Key points

• An ethical investment strategy that excludes companies tied to terrorist activities or countries.

• Focuses on socially responsible investing by avoiding companies that operate in or support terrorism-linked regions.

• Often involves screening portfolios based on government sanctions or human rights criteria.

Quick Answers to Curious Questions

Why do some investors choose terror-free investing?

To align their investments with ethical principles, avoiding any association with companies that may be linked to terrorism or human rights violations.

How do terror-free funds screen companies for their involvement in terrorism?

They typically use government sanctions lists, such as those issued by the U.S. Treasury, and corporate governance reports to exclude companies.

What impact does terror-free investing have on a portfolio’s performance?

While it may limit investment options, terror-free investing can still offer competitive returns, especially if aligned with broader ethical investment strategies.