|
March 09, 1999
Investing with Your Values - Part I
SocialFunds.com --
(from the GreenMoney Journal)
As our society turns into a nation of investors through
retirement plans, mutual funds and direct stock purchases, more investing information
becomes
available then ever before. From The Wall Street Journal to numerous financial magazines to the 150
million people on the web and more watching TV, sufficient data proliferates to last this decade
and several more.
 But who can sort the ever-expanding information heap
into usable bundles of relevant information? For socially responsible investors, we are doing just
that by giving people the means to be informed investors, to know what they own and why they own
it.
For us it began nearly a decade ago when GreenMoney Journal (GMJ) founder, Cliff
Feigenbaum, discovered that his former employer, a large community hospital, invested 401(k)
dollars in tobacco-laden mutual funds, in direct opposition to the hospital's health
mission.
Do you know what companies are held in your mutual funds?
GreenMoney's
solution is to offer relevant information not just about returns, but about the social impact of
investing. Such information
amounts to an exciting and prosperous
consequence: financial
decisions based on profit AND conscience, or, as we say at GMJ, "making money and making a
difference."
And Socially Responsible Investing (SRI) is growing. The more than $1.2
trillion committed currently to screened investments means that almost ten percent of all U.S.
money invested is SRI influenced. [Source: Social Investment Forum] SRI is exerting a rapidly
expanding financial presence, moving forward with commitment and competence while increasing
its
influence in the national and global economy.
Eleven of the 49 socially and
environmentally responsible mutual funds returned more than 30 percent in 1998. The Citizens Index
Fund topped
the list with a total return of 42.8 percent.
The evidence accumulates:
Morningstar awarded seven SRI mutual funds its coveted 5-star rating in 1998. Louis Rukeyser listed
the solid-performing Domini Social Equity Fund as one of the "Rukeyser 100" in his monthly
newsletter. Such heavy hitters as Salomon Smith Barney,
Prudential Securities, Neuberger Berman,
Merrill Lynch, Dreyfus, and others all have begun offering "screened" money management and/or
mutual funds totaling billions of dollars in such investments.
And now [insert drum roll
here] one of the world's largest financial information company, Bloomberg, is publishing its
first-ever book
on SRI, Investing With Your Values by Hal Brill, Jack A. Brill and Cliff
Feigenbaum. Foreword by Amy Domini, CFA.
Bloomberg is just one part of the media attention
that has embraced the responsible investing story. In 1998, hundreds of articles on SRI ran
in
newspapers and magazines as well on TV and radio. They ranged from the Journal of Investing,
Fortune, Money, Consumer Reports and Dow Jones
Investment Advisor to CNBC and Marketplace radio.
Socially responsible investment advisor Jack A. Brill, of Natural Investment Services, Inc.,
is
in second place overall after five years in The New York Times mutual funds
study.
This issue of GreenMoney Journal continues our flow of SRI information that began in
print in 1991, and on the web in 1995. It features SRI screens and mutual funds, SRI highlights
from 1998, as well as what's happened so far and what's ahead in 1999. We'll discuss the work
of
the Social Investment Forum and the tremendous growth of the natural products industry.
Below, you'll find selections from our forthcoming book,
Investing With Your Values (Bloomberg
Press, May 1999).
New in this issue appears the first of a six-part series on Community
Investing by Tim Freundlich of the Calvert Foundation. Also, our mutual
fund chart adds a new
rating system, the "NIS Social Rating" developed by Jack Brill (The top overall rating is five
hearts). See below for a list of SRI resources including investing publications and web
sites.
Also check out GreenMoney Journal online at- www.greenmoney.com for new articles.
You'll find an article by Stephen Viederman of the Jessie
Smith Noyes Foundation on
mission-related investing, an expanded calendar of events, an expanded green news column and many
other resources.
In upcoming issues this year look for articles on Eco-Travel, WETV and
Hazel Henderson, Business Ethics SRI Leadership Awards, Natural Capitalism by Paul Hawken, Amory
and Hunter Lovins, Stonyfield Farms, Business for Social Responsibility, The Natural Step, Redwood
Activists, Responsible Wealth, and an in-depth look at the SRI International mutual funds. We also
will feature excerpts from Investing With Your Values and the Bloomberg story behind the
book.
How can you become involved in SRI?
Investing in a socially and environmentally
responsible mutual fund is just one way to put your money to work for a more just world.
The
GreenMoney Journal provides abundant information on responsible investing and business. We
believe that in-depth information on companies and their
financial and social activity helps
large and small investors make informed decisions. We promote the ethical creation of financial
independence. Four key strategies toward this end are:
* Screen Companies: exclude
securities (stocks) from a portfolio or mutual
funds.
* Seek Companies: include
securities (stocks) in a portfolio or mutual funds.
* Support Communities: invest in
community development through responsible banks, credit unions, and loan funds.
* Influence
Companies: use shareholder activism and resolutions to impact
corporate
behavior.
Screens
Investment screening integrates your money and values. Screen in
the positive and screen out the negative. For example, do you want to include or exclude certain
companies because of their products and corporate behavior? Do you want to be involved in
shareholder activism using shareholder resolutions to change corporate behavior?
Good news:
approximately half of the largest 1,000 publicly traded U.S. companies meet most socially
responsible mutual funds screening
criteria.
There are now two SRI Indexes measuring
performance against the overall market. The Domini 400 Social Index contains 250 companies from the
Standard & Poor 500 (S&P 500). The Citizens 300 Index contains 200 companies from the S&P
500.
Are there performance sacrifices when investing in socially and environmentally
responsible ways? No. Consider these numbers from two SRI indexes that have outperformed the S&P
500 every year.
The Domini 400 Social Index was launched in May 1, 1990 by Kinder,
Lydenberg & Domini (KLD) to track 400 companies that pass multiple social
and environmental
screens. From May, 1990, through December 1998, the Domini 400 Social Index demonstrates the
long-term profitability of SRI by returning 442.0 percent compared to 365.6 percent for the S&P
500. More information at- www.kld.com
The Citizens 300 Index was launched on December 31,
1994 by Citizens Funds to track 300 companies that pass numerous social and environmental screens.
From January 1995 through December 1998, the Citizens 300 Index also demonstrated the profitability
of SRI by returning 260.3 percent compared to 189.3 percent for the S&P 500. More information at-
www.citizensfunds.com
For 1995 - 1998, both socially responsible investing indexes
outperformed the overall market as well. Here are the return figures for the three different
market indexes: In 1998,Citizens 300 Index returned 45.0% percent, the Domini 400 Index 34.6%
percent, the S&P 500 Index 28.8% percent. In 1997, Citizens 300 Index returned 37.2 percent, the
Domini 400 Index 38.3 percent, the S&P 500 Index 33.4 percent, In 1996, Citizens 300 Index
returned 26.2 percent, the Domini 400 Index 23.7 percent, the S&P 500 Index 23.1 percent. In 1995,
Citizens 300 Index
returned 40.1 percent, the Domini 400 Index 38.2 percent, the S&P 500 Index
37.5 percent.
Note to Reader: The social investing screens below are used by responsible
mutual funds. For more information call any of the mutual funds on the chart and request a copy
of their screening criteria, the fund's prospectus and an annual report.
POSITIVE SCREENS
(Seek)
+ Good labor relations, effective equal opportunity for women and minorities,
management and employee diversity, employment practices,
employee stock purchasing plan/profit
sharing, worker health and safety, employee & family benefits, education and training programs,
health care, child care, elderly care
+ Good customer relations, corporate openness &
citizenship, community development & involvement, charitable giving, product safety and
quality,
human rights record, code of conduct for suppliers
+ Good environmental record,
CERES Principles signatory (environmental standards), pollution prevention measures, conservation,
renewable energy resources, recycling programs, natural & sustainable farming and food
production
+ Other areas of attention: positive response to shareholder resolutions,
financing for small business, affordable housing, products designed for recyclability, The Natural
Step trainings, warranties, research & development, smoke-free workplaces & restaurants, financing
libraries,
hospitals, schools, mass transit, park development, open space
acquisition
NEGATIVE SCREENS (Avoid)
- Discriminatory labor and employment practices,
lack of management and workforce diversity, excessive executive & board of directors compensation,
poor response to shareholder resolutions, human rights violation record,
business activities
with repressive governments, defense & weapons contractors (military), unethical business
practices
- Poor environmental record/EPA Violators -water, air and land polluters, nuclear
power, nuclear or biological weapons manufacturers, hazardous waste
and agriculture chemicals
manufacturers and exporters
- Alcohol, tobacco, gambling, use of animals in product testing
- Other areas of attention: international labor sourcing, inappropriate advertising,
violence in the media, personal weapons manufacturer, poor
quality products, business activities
in Burma, Nigeria & N. Ireland, China (Tibet, censorship and Three Gorges Dam, etc.), unrecyclable
products, excessive waste, U.S. Treasury securities, corporate PAC donations, violent
toys or
video games, numerous lawsuits, large workforce reductions
MUTUAL FUND RETURNS
One of
the best ways to get started investing ethically is through several of the "screened" mutual funds.
In 1998 eleven of the socially and
environmentally responsible mutual funds returned 30 percent
or more. Here are top SRI funds with returns: (1.) Citizens-Index 42.8%, (2.) Citizens-Emerging
Growth 42.7%, (3.) Bridgeway-Social Responsible 37.8%, (4.) American Trust-Allegiance 36.8%,(5.)
Rightime-Social Awareness 36.3%, (6.) Domini-Social Equity 33.0%, (7.) Green Century-Equity 32.3%,
(8.) Citizens-Global Equity 32.2%, (9.) DevCap-Fund 31.9%, (10.) Security-Social Awareness 30.4%,
(11.) Dreyfus-Third Century 30.2%.
MUTUAL FUNDS
Along with the increased media
exposure of SRI, 1998 also marked the most advertising by the SRI industry ever; Calvert, Citizens,
Domini and
especially Pax World all had numerous print ad campaigns throughout the year. The
following are performance and media highlights from a very active year in the SRI mutual fund
business.
ARIEL FUNDS
* Ariel Funds (www.arielmutualfunds.com), Appreciation and
Growth are developing solid long-term returns while receiving extensive media
attention. Ariel
Appreciation Fund has averaged 28.8 percent and Ariel Growth has averaged 22.8 percent over the
last the three-year period
ending 12/31/98.
Smart Money (Feb. 1999) Ariel Appreciation
managed by Eric McKissack was chosen as one of the best overall funds in their "as good as
it
gets" article that mentioned SRI.
US News & World Report (Feb. 1, 1999) "Best Stock Funds
for the Long Haul" article in the 1999 best mutual funds cover story included Ariel
Appreciation
#10 out of 414 aggressive growth funds (mid-large cap category).
Black Enterprise (January
1999) Ariel Growth portfolio manager John Rodgers and director of marketing Mellody Hobson were
quoted. Ariel
Appreciation portfolio manager Eric McKissack was featured in the stock update
(Nov. 1998).
Wall Street Week with Louis Rukeyser TV program had Ariel portfolio manger Eric
McKissack as a guest on January 15, 1999.
Mutual Funds (Dec. 1998) Ariel Appreciation was
listed among 393 funds which received their 5-star rating. These funds have generated superior
risk-adjusted returns over a minimum of three years.
Fortune (August 17, 1998) "The Best
Mutual Funds" article included Ariel Growth. The magazine chose the best 221 out of thousands of
funds with five year track records and consistent management teams. Earlier John Rogers, Ariel
Growth's socially conscious manager was featured (Feb. 16, 1998).
CALVERT FUNDS
*
Calvert's (www.calvertgroup.com) biggest hitter this year was their Capital Accumulation Fund,
returning 29.4 percent for 1998 and an
average of 20.0 percent for the three year period ending
12/31/98. The Fund is managed by Eddie Brown, president and founder of the $4 billion Brown Capital
Management and the 1996 Louis Rukeyser Wall of Fame inductee. Black Enterprise (May 1998) featured
Mr. Brown in their Moneywise column.
* Last April Calvert introduced a new mutual fund,
Social Managed Index Portfolio, which tracks the Russell 1000, a widely recognized
large-cap
index. The renowned State Street Global Advisors will manage the fund.
* Calvert's Social
Investment Equity Fund has new managers as of September 1998. The new managers are Atlanta Capital
Management, who replaced Loomis, Sayles & Co. The firm was chosen for its consistently excellent
long-term performance for similar clients.
* The New York Times (June 7,1998) A feature
article on the Calvert World Values International Equity Fund, highlighted its social criteria and
geographic features. The fund is managed by Andrew Preston, director of Murray Johnstone
International based in Glascow, Scotland.
* Calvert's President Barbara Krumsiek was
selected by President Clinton to participate in the First National Summit on Retirement
Income
Savings in June 1998. The conference is a response to the urgent need to increase the
nation's low savings rate and promote long-term financial security into retirement. Calvert Group
was also recognized for the sixth year in a row by Working Mother magazine as one of the 100 best
companies for working mothers.
CITIZENS FUNDS
Top performers and a new president
highlighted the year.
* Citizens Funds ( www.citizensfunds.com) boasted the #1 and #2 SRI
funds in 1998 with returns of 42.8 percent for Citizens Index Fund (CI) and 42.7 percent for
Citizens Emerging Growth Fund (CEG). For three-year period ending 12/31/98 the Funds averaged 33.3
percent and 24.1 percent,
respectively.
* CI received the highest 5-star rating from
Morningstar for three year period ending 12/31/98. The CI was listed in Money (Feb. 1999) as the
twenty-third best performing stock fund for the three-year period ending 12/31/98.
*
Investor's Business Daily (1/6/99) Ranked CI #16 out of 25 top Growth funds for 24 month period
ending 12/31/98 with a cumulative return
of 90.0 percent and gave it an A+ performance rating
for 36 months. CEG was also given an A+ performance rating for 36 months, which means they're in
the top five percent of funds in their category.
* The Wall Street Journal (1/6/99) The
mutual fund scorecard for Mid-Cap funds listed CEG #3 out of the top 15 performers for one year as
of
12/31/98 with a return of 42.7 percent. The portfolio managers Rich Little and Ron Jacks were
interviewed in Individual Investor (February 1999).
* The Citizens Global Equity Fund
received a 5-star rating from Morningstar when rated among 840+ global equity funds for the
one-year
ended 12/31/98 with a return of 32.2 percent. The Fund received attention in major
publications including Forbes, USA Today, Your Money and
Kiplinger's Personal Finance.
*
Your Money (June/July 1998) Included three of the Citizens Funds: Emerging Growth, Index, and
Global Equity in their "Annual Top 400
Mutual Funds to Buy Now."
"We are particularly
proud of our performance and ranking because we have achieved our strong performance while only
investing in companies
that meet the highest standards of corporate responsibility." - Sophia
Collier, Citizens Advisers Board Chairman
* John Shields was appointed the new President &
CEO of Citizens Funds in September 1998. Mr. Shields replaced Sophia Collier who moved
to
Chairman of the Board of Citizens Advisers and to work more with the highly successful
Citizens Index Fund. The move for a new president was mainly due to the growth of Citizens Funds.
The company has grown from $200 million in
assets in a single money market fund to five funds
with over $700 million in assets. With that growth, the company has become more complex, and they
wanted to strengthen their management team with additional experienced hands. Mr. Shield's
appointment was noted in Pension and Investments, Dow Jones, Bloomberg, and Business Today, among
other publications.
Mr. Shields had this to say upon taking his new position: "As a
25-year veteran of the mutual fund industry. I have gained a broad view and
diverse set of
experiences. With this perspective, I am especially committed to Citizens' fundamental
philosophy: that a social and environmental screening process provides added insight into a
company's potential performance and therefore, is a smarter and potentially more profitable
approach to investing."
continued - see Investing with Your Values - Part II
©
SRI World Group, Inc. All Rights Reserved.
Top
|
