I had a long conversation last night over a glass of very decent red wine with a guy who I respect both as a Catholic and a businessman. I had asked his advice in the matter of stock-market investing, and how a Catholic could ensure that his money was being well spent. The wine was great, my respect for him didn't change one iota, but we arrived at virtually no common ground on the issue.
My problem is based on the concept that our money speaks for us, and that we are responsible for the "actions" performed by our money after it leaves our hands. Investing, and especially mutual fund investing, essentially requires a blind trust in individuals whom I have never met and who will make decisions that I may or may not agree with. It is true, I am protected by law and to some extent by the culture of professional ethics (such as they are) in the financial industry.
My friend countered that our contributions are very small relative to the size of the entire market and therefore have negligible effect. From a practical standpoint, this is quite true. But from a moral perspective, it is a specious argument. If everyone else jumped off a bridge...
We discussed sundry other factors including the benefit of American business to the third world, our responsibility to care for our families, and the nature of contemporary business in general.
I have no difficulty with investing, as such. I think business is a good thing and that God is pleased with the flow of commerce that acts as the lifeblood of culture. But stating that business is good is not the same as saying that all business is good. It is quite clear that some business helps people, while other types of businesses harm people. I think the best way to enourage the former and supress the latter is by encouraging local businesses as much as possible. This is not an infallable solution, but a good general rule.
This was the basis of the economic theory of Distributism promoted by Hillaire Belloc and G.K. Chesterton. There is still some interest in Distributism. A Google search will provide links to several associations still discussing and promoting the theory.
At the end of the day, the fact is that our money speaks for us. We are accountable for what it does when we aren't around. It may be behaving, and it may not. It's up to you to discern that.