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What's really in your fund?

By
Natalie Rix
November 15, 2017

Buying a pair of pants can be pretty scary.

Really think about the last time you went shopping for new clothes.

Online shoppers aside, whether it was a new pair of pants or dress shirt – you were able to try on the item and look at the label and could examine the color and fabric. What would happen if instead, the clothing store packaged up each type of item so you were forced to buy a big brown box that said “pants” and was filled with all kinds of cuts and colors you may or may not approve of.

In many cases, that’s what happens when people invest through ETFs and mutual funds. These vehicles are filled with all sorts of investments (sometimes referred to as “securities”), but usually the emphasis is on the overall strategy or investment style. When you think of it that way, it’s not surprising that nearly half (49%) of Millennials who currently invest couldn’t name the top three companies in their investment portfolios.

This is according to Swell’s recent “Money Meets Morals” recently released poll. We asked lots of questions to an audience of more than 2,200 people across all ages and locations. Our goal was simple: to understand how people account for their value systems when making financial decisions. Aside from the surprising finding above, we also learned that:

  • 78% of Millennials who invest are currently investing in socially responsible or impact investments or plan to in the future.
  • 27% of Millennials who invest say that they were concerned that their money isn't really backing positive companies when investing, compared to only 18% of Gen X investors.
  • Nearly two in five (19%) millennial investors say they don't understand these types of investments.

So what can you do about it?

Interested in finding out what companies are in your investments? There are a few simple steps you can take:

Log into your online portal for your retirement account. If you poke around, you should be able to locate the tickers for the funds you invest in. A “ticker” is a five letter code for mutual funds, and a three or four letter code for ETFs. Once you find those, enter them into a website like Morningstar that tracks investments. Here you can find the top few companies within your fund.If you go with Morningstar, you can also check out the top 25 names in the fund.You can also find on the fund’s Morningstar page a “Prospectus” which is a long document with more information on the fund, including the securities within it.

Finally, once you know the companies your hard-earned dollars are going towards, you can use resources like Project JUST to check out companies in the retail sector or you can look into the research departments at your local universities. And, as always, current news articles can help you keep tabs on different companies and what they’re up to.

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