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Fidelity launches two low-cost index funds focused on sustainability

A sign outside a Fidelity Investments office in the Century City section of Los Angeles.
A sign outside a Fidelity Investments office in the Century City section of Los Angeles. Richard Vogel/Associated Press/File 2016/Associated Press

In a sign of the times for Fidelity Investments, the Boston mutual fund giant on Monday launched two new low-cost index funds, both focused on sustainability, or the stocks of companies that pay attention to the environment, corporate governance, and social issues.

Fidelity for years stayed out of so-called “socially responsible” investing, saying it would always pick the most profitable stocks for its investors. But the sustainable trend has now become so ubiquitous that most mainstream firms now have offerings, in part to appeal to millennials.

Fidelity’s new funds — a US Sustainability Index Fund and an International Sustainability Index Fun — follow on the firm’s lone actively managed “ESG” fund, an Environment & Alternative Energy Portfolio. Like other active investment managers, Fidelity is battling the heavy flow of money into less costly index funds that buy lists of stocks, rather than relying on human research and investment management.


In a statement, Colby Penzone, senior vice president for Fidelity’s Investment Product Group, said the firm was introducing the new sustainable funds “to help many investors better align their personal principles with their investment objectives.”

Boston-based Putnam Investments last week announced it was building an ESG team. Investors have $197 billion in sustainable mutual funds nationally, according to Morningstar Inc. in Chicago.

Beth Healy can be reached at beth.healy@globe.com. Follow her on Twitter @HealyBeth.