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Overseas mutual: investing in sustainability abroad.

For socially and environmentally responsible investors leery of putting more money into a still-lagging American economy, international mutual funds focusing on investments in green companies abroad are good options to help minimize risk while at the same time expanding one's investment horizons. And today ethical investors have more choices than ever to do well by doing good with overseas mutual funds.

The mutual fund industry was built on the principle that diversification is the hallmark of prudent investing. But by pouring all investment dollars into domestic funds, people are not only missing opportunities worldwide but are also subjecting their money to the ups and downs of the U.S. economy. Going international adds valuable diversity.

World Values

Long a leader in domestic socially responsible investing (SRI), Calvert Mutual Funds launched its World Values International Equity Fund in 1992. Since that time, the multinational fund has boasted an average annual return greater than four percent--not bad, considering many domestic funds are in the loss column over that span. Calvert, founded on the principle that corporations adhering to socially responsible business practices will succeed in the long run, makes sure all of its holdings--domestic and international--meet or exceed strict environmental, labor and consumer safety criteria.

"By investing both domestically and internationally, investors can lower their risk exposure and increase their growth potential in being exposed to a much broader economy," says Calvert's Melinda Lovins. "Also, international stocks enjoy the benefit of a valuation discount to the U.S. market, and hence are likely to enhance return"

To date, half of the investments in Calvert's World Values Fund are in British and Japanese companies. But the fund also has large holdings in France, Germany, Switzerland, Holland and Australia.

Another leader on the domestic SRI front, Citizens Funds, has offered an international option, the Global Equity Fund, for the last decade. Global Equity includes green holdings throughout Europe, Asia and beyond. Both at home and abroad, Citizens screens out any potential holdings if they engage in the production of alcohol, tobacco, weapons, or nuclear power or if they do not have an environmentally friendly track record. Holdings include UBS (Germany), Nokia Corporation (Finland), Komatsu (Japan), and Zurich Financial Services (Switzerland).

Canadian SRI fund provider Meritas now offers an International Equity Fund, which invests primarily in large capitalization companies based in Europe, Australia and the Far East. Less than 20 percent of the company's fund is invested emerging markets so as to mitigate downside risk.

"International equities are a good part of a well-balanced portfolio," says Meritas CEO Gary Hawton. "Historically, international markets have performed as well if not better than Canadian and U.S. markets."

Portfolio 21, a no-load (no sales commission) mutual fund run by Progressive Investment Management of Portland, Oregon, invests in foreign companies based on commitment to the environment. Currently 70 percent of the fund's portfolio consists of companies outside of the United States, including Sweden, Denmark, Norway, Finland, Germany, Switzerland and England.

"When we first began researching companies for inclusion in Portfolio 21, we thought that it was going to be a domestic stock fund," reports Portfolio 21 chairperson and co-founder Carsten Henningsen. "We soon learned, after reviewing over 2,000 companies worldwide, that there are not enough companies in the U.S. implementing sustainability strategies. So the fund became global."

New Risks

Investors should be aware that putting their money into foreign markets comes with risks not found when investing in U.S. securities alone. If you buy securities in another country's currency, the transaction is dependent upon currency exchange rates, which can have a significant effect on an investor's return. Other risks may include political instability, high taxes and other factors.

But despite these risks, individual investors looking to protect themselves through diversification should consider putting some of their hard-earned dough into mutual funds focusing on stable international markets. And with the help of trusted SRI money managers from these firms, there is no need to lose any sleep while helping the global economy move in a sustainable direction. CONTACT: Calvert World Values International Equity Fund, (800)368-2748, www. calvertgroup.com/funds_profile926.html; Citizens Global Equity Fund, (800)223-7010, www.citizensfunds.com/ individual/products/globalequitylhnd.asp; Meritas International Equity Fund, (866)MERITAS, www.meritas.ca/funds/ MSE1084_5.shtml; Portfolio 21, (877) 351-4115 ext. 21, www.portfolio21.com.

RODDY SCHEER likes a broad-based international portfolio.
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Title Annotation:Money Matters
Author:Scheer, Roddy
Publication:E
Geographic Code:1USA
Date:Jul 1, 2004
Words:728
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