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May 18, 2000
Aquinas Funds Makes Social Investing a Matter of Faith
The leading Catholic family of mutual funds finds common ground with socially responsible
investors, and leads the way in shareholder dialogue.
SocialFunds.com --
Saint Thomas Aquinas was the 13th century Dominican monk, visionary, and teacher particularly
concerned with the relationship between faith and reason. While St. Aquinas predates socially
responsible investing by several hundred years, he makes an imposing and appropriate image for
educated Catholics who want to make investments based on their religious and social values.
 Aquinas Funds is the Dallas, Texas-based
fund family devoted to Catholic Values espoused by The National Conference of Catholic Bishops.
With about $200 million in assets, Aquinas addresses many of the same social issues considered by
other socially responsible funds, but rather than applying exclusionary social screens Aquinas
follows a distinctive path of shareholder activism and discourse with corporations.
"We
are the only Catholic fund that is a shareholder activist, and we have a great history of real
results," said Frank Rauscher, President and CEO of Aquinas. "The primary social responsibility
values and criteria were set by the Catholic bishops. We are simply an easy way for Catholics to
align their investments with their faith."
Of course, high on the list of social
priorities espoused by the bishops, up there with affordable housing, discrimination, and weapons
of mass destruction, are more specific moral issues like abortion and contraception. Aquinas is the
only pro-life activist fund family, and devotes considerable energy in this area.
After
six years in the mutual fund business Aquinas offers four funds, an Equity Income Fund, a Balanced
Fund, a Fixed Income, and an award-winning Equity Growth Fund. The latter has received 5-star
ratings from both Morningstar and Mutual Funds Magazine, and has a 5-year average annual return of
23.97 percent, demonstrating that Catholic investors do not have to sacrifice their values to
achieve competitive financial returns.
Aquinas Funds subjects their portfolios to a
variety of social "screens," including tools from Kinder, Lydenberg, and Domini (KLD), the
Interfaith Center for Corporate Responsibility (ICCR), and their own proprietary Catholic issues
screens. But rather than merely excluding companies based on these analytical tools, Aquinas uses
them to evaluate companies for shareholder advocacy.
While they will support shareholder
resolutions when needed, such as recent proposals with Clear Channel Communications, Outdoor
Systems, RJReynolds, and Ford, Aquinas prefers a less confrontational approach. Most shareholder
resolutions they have supported are those sponsored by fellow members of ICCR that have been
working with the company for some time and have learned that this is the only way to get the
attention of that particular company.
More often, Aquinas chooses to initiate dialogue
with company management, providing additional data to support policy changes that are in the best
long-term interest of the company. Although Aquinas is small, they have been very successful at
collaborating with like-minded shareholders to get the ear of company management.
"Most of
the companies that we deal with are run by honorable people, with businesses that are probably 95
percent good and acceptable," said Rauscher. "We try to provide the company with a good economic
reason to change their position and let the CEO or other senior executive provide the leadership."
Some examples of the results of their shareholder advocacy efforts include GE's decision
to promote women to top management positions, and NBC's position as the least violent network on
TV. WingspanBank.com, a division of First USA Bank, acknowledged that they were covered by the
community finance guidelines of the Community Reinvestment Act, with considerable benefits for
Delaware communities.
Aquinas has also been instrumental in Whirlpool's decision to stop
funding to Planned Parenthood, and the resolve of four pharmaceutical companies, Merck, Johnson &
Johnson, Upjohn, Dura Pharmaceutical, and Pfizer to not manufacture the French abortion pill,
RU-486. The result has been that the pill has been unavailable in the U.S. since the FDA approved
it.
Like many successes in socially responsible investing, these corporate decisions have
come on the back of a strong economy and a vibrant stock market. "Companies are more willing to
make socially responsible decisions that have short-term adverse economic effects, in return for
long-term benefits, when their profits are already up," said Rauscher.
But even with the
uncertain economic future of the new millennium, Aquinas has an important role as an investment
option for Catholics and Catholic organizations that want more than passive stewardship. "Catholic
theologians are beginning to heighten awareness of the responsibilities of being a good Catholic
steward," said Rauscher, "and this will get the attention of those in position to be a good role
model and do their duty."
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SRI World Group, Inc. All Rights Reserved.
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