Profits with a purpose: socially responsible investment funds give investors revenues with a clean conscience.If investors want to let their conscience be their guide, there are an increasing number of mutual funds that allow them to do just that. Concerned investors, for instance might not want to back a company that makes profits from cigarettes, alcohol, or guns. "There are now 109 mutual funds that we classify clas·si·fy tr.v. clas·si·fied, clas·si·fy·ing, clas·si·fies 1. To arrange or organize according to class or category. 2. To designate (a document, for example) as confidential, secret, or top secret. as socially responsible," says Greg Carlson, fund analyst at Chicago-based mutual fund tracker Morningstar. "They can vary significantly, from one fund to another. Some use what might be considered typical SRI screens, while others follow particular religious values." Although funds are by no means unanimous in what constitutes socially responsible investing Socially responsible investing describes an investment strategy which combines the intentions to maximize both financial return and social good. In general, socially responsible investors favor corporate practices which are environmentally responsible, support workplace diversity, , some criteria are common. "One traditional set of social screens eliminates 'sin stocks' from companies associated with alcohol, tobacco, or gambling," says Christopher Geczy, assistant professor of finance at The Wharton School of Business at the University of Pennsylvania (body, education) University of Pennsylvania - The home of ENIAC and Machiavelli. http://upenn.edu/. Address: Philadelphia, PA, USA. . Some SRI funds try to avoid corporate polluters, among other environmental offenders, while some seek companies that practice diversity. Religious funds might include some of the above-mentioned screens in addition to an aversion a·ver·sion n. 1. A fixed, intense dislike; repugnance, as of crowds. 2. A feeling of extreme repugnance accompanied by avoidance or rejection. to companies financing organizations considered to be pro-abortion, for example, or those permitting same-sex unions A Same-sex union refers to an enduring relationship between two people of the same gender. Literary, historical, and archaeological evidence of such unions has been found for a number of diverse cultures as early as 2400 B.C. . Some funds explicitly operate in accordance with Islamic principles. While socially responsible investing is subjective, there probably is a fund out there for you. But is it possible to invest through SRI funds and still earn substantial returns? "Definitely," says Michael Lent Michael Lent (born 22 June 1976) is the co-creator and publisher of Toby Room magazine. His direction of the arts organization ArtRod led to the creation of the Tollbooth Gallery, which he co-created and curates with fellow artist Jared Pappas-Kelley. , principal, Progressive Asset Management in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . "I've seen studies that show SRI funds have done just as well as non-SRI funds, over time. Some SBI SBI Special Background Investigation SBI Subsidiary Body for Implementation SBI State Bank of India SBI Secure Border Initiative SBI Small Business Institute SBI Stockholm Brain Institute SBI Serious Bacterial Infection SBI Society of Breast Imaging funds have exceptional records--Winslow Green Growth Fund (WGGFX), for example, is among the leaders in its category." This fund has a three-year annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. return of 34%, as of this writing, ranking in the top 6% of small-company growth funds. Lent says that his clients do all of their mutual fund investing through SRI funds, and that they're happy with the rewards. "You can build a diversified diversified (di·verˑ·s portfolio from funds such as Calvert Large Cap Growth I Fund (CLCIX), Parnassus Fund (PARNX), and Ariel Fund (ARGFX)." (Ariel Capital Management, which operates the fund, is ranked No. 2 on the BE ASSET MANAGERS list with $19.36 billion in assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. .) Like other types of funds, not all SRI funds perform well. "The group contains so many different types of funds that you can't lump them together," says Carlson. "Of the 75 SRI funds that have records going back at least five years, 37 have outperformed their peers." To find winning SRI funds, examine the mix of companies a fund holds. Avoid funds with excess concentration in a few areas. "Many SRI funds have been heavy in technology and healthcare, [excluding] industries that might be considered polluters," says Carlson. He mentions Calvert Social Investment Equity Fund (CSIEX) and Pax World Balanced Fund Balanced Fund A mutual fund that invests its assets into the money market, bonds, preferred stock, and common stock with the intention to provide both growth and income. Also known as an asset allocation fund. (PAXWX) as long-term success stories among SRI funds. Geczy, who has co-written an academic paper, Investing in Socially Responsible Mutual Funds, concludes that SRI funds that limit the choice of companies they buy decrease their returns by 4% to 5%, which he considers a major mistake. In his paper, Geczy argues that by putting 44% of your money into AHA Diversified Equity I Fund (AHDEX), 31% into Domini Domini may mean:
Any of three unmanned U.S. experimental satellites. Vanguard I (1958), the second U.S. satellite placed in orbit around Earth (after Explorer 1), was a tiny 3.25-lb (1.47-kg) sphere with two radio transmitters. Total Stock Market Index fund (a non-SRI fund), with virtually the same returns. This strategy shows that for true believers "True Believers" is the fourth episode of the first season of the CBS television series The Unit. The episode aired on March 28, 2006. Summary The team is sent to Los Angeles to protect Mexico's drug minister from an assassination threat. , SRI funds can be victorious and virtuous.
SOCIALLY RESPONSIBLE INVESTMENT FUNDS
1-Year 3-Year
Ann. Total Ann. Total
Fund Name Ticker Return * Return *
Winslow Green Growth WGGFX Small Growth 38.56
Calvert Large Cap Growth A CLGAX Large Growth 13.93
Ariel ARGFX Mid-Cap Blend 5.00
Pax World Balanced PAXWX Mod. Allocation 8.29
Domini Social Equity DSEFX Large Blend 4.91
Calvert Social Investment CSIEX Large Growth 5.64
Equity A
Citizens Core Growth Stndrd WAIDX Large Growth 5.42
Parnassus PARNX Large Growth 6.45
5-Year
Ann. Total Initial Toll-Free
Fund Name Return * Investment Number
Winslow Green Growth 26.72 9.47 888-314-9049
Calvert Large Cap Growth A 15.73 5.53 800-368-2748
Ariel 15.32 10.93 800-292-7435
Pax World Balanced 10.41 4.27 800-767-1729
Domini Social Equity 8.85 0.86 800-582-6757
Calvert Social Investment 8.27 2.81 800-368-2748
Equity A
Citizens Core Growth Stndrd 7.84 -1.92 800-223-7010
Parnassus 3.65 -0.82 800-999-3505
Expense
Fund Name Ratio
Winslow Green Growth 5000
Calvert Large Cap Growth A 2000
Ariel 1000
Pax World Balanced 250
Domini Social Equity 2500
Calvert Social Investment 1000
Equity A
Citizens Core Growth Stndrd 2500
Parnassus 2000
* AS OF JUNE 5, 2006
** FUND HAS OPERATED LESS THAN ONE YEAR
SOURCE: MORNINGSTAR INC. MORNINGSTAR MAKES EVERY EFFORT TO ENSURE THE
ACCURACY AND COMPLETENESS OF THIS DATA, BUT CANNOT GUARANTEE IT.
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