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July 19, 2001
Large- and Medium-cap Social Mutual Funds Are Beating Their Peers
by Mark Thomsen
One large-cap and two medium-cap socially responsible funds are near the head of the pack when
compared to similar funds for one-year performance.
SocialFunds.com --
While market doldrums continue, social investors can still look to a few large- and mid-cap mutual
funds that are outperforming most of their conventional peers. Although the one-year returns are
not always stunning, they are very good considering the S&P 500 has returned -14.79 percent. All
figures quoted in this article are as of June 30.
 One large-cap social mutual fund is in the
top twenty percent of all large-cap funds. The Calvert Social Equity Fund (ticker: CSIEX) is a
large-cap value fund that places in the 18th percentile for one-year performance. It has returned
3.17 percent in a market where many similar funds are posting negative numbers, sometimes in the
double-digits.
Calvert Group, a Bethesda-Maryland based firm that offers a wide range of
socially responsible mutual funds, attributes the fund’s recent success to the manager,
Atlanta Capital Management. Atlanta Capital Management took over the fund in September of 1998.
“We look for “high-quality” growth companies with a demonstrated record
of consistent earnings and dividend growth,” said Daniel W. Boone III, Calvert Social
Equity’s portfolio manager. “That is, companies with a ten-year or longer financial
history and a B+ or better rating by Standard & Poor’s.”
Atlanta Capital sees
a tremendous overlap in their universe of high-quality companies and socially responsible
companies. Calvert Group employs social screens that cover six broad areas including the
environment, human rights, product safety, labor relations, weapons contracting, and the rights of
indigenous peoples. Boone said the screens in some ways act as a proxy for identifying good
management.
In case you were wondering, Boone is related to the famous Daniel Boone of
early American history. The portfolio manager is a direct descendant of the brother of the
Kentucky pioneer.
Calvert Social Equity’s top three holdings as of June 30 were Microsoft (MSFT), SBC Communications (SBC), and Johnson & Johnson(JNJ).
Flex-funds Total Return Utilities (FLRUX) is a mid-cap fund that placed in the top twenty
percent among its peers for one-year return of 5.36 percent. Total Return Utilities invests in
domestic and foreign utility stocks, but does not invest in electric utilities that generate power
from nuclear reactors. Since its inception in June of 1995, the fund has returned 15.81 percent.
It is offered by The Flex-funds, which is a part of Dublin, Ohio-based Meeder Financial.
Meeder Financial has a sub-advisor, Miller/Howard Investments of Woodstock, New York, managing
Total Return Utilities.
“We carry a balanced group of stocks with representation in
all utility sectors,” said Lowell Miller, Miller/Howard’s president and the
fund’s portfolio manager. “Thus, when phones are out of favor we may still do well
with gas or water or our limited number of electric companies, and vice versa.”
The
social goals of the Total Return Utilities fund are achieved through exclusionary screening, proxy
voting and participation in shareholder initiatives. Miller/Howard follows its own social
investment policy and discloses its proxy votes through a quarterly newsletter sent to clients.
The fund’s largest holding is SBC Communications. Its other leading stocks are
gas-related, such as Kinder Morgan (KMI), Williams Companies (WMB), and Questar (STR).
Another
mid-cap fund topped over 90 percent of its competitors for one-year performance. The Ariel
Appreciation Fund (CAAPX) had a return of 30.61 percent, which put it in the 7th percentile among
its peers.
A blend fund, Ariel Appreciation is managed by Chicago-based Ariel Capital
Management. The firm screens out companies primarily involved in the manufacturing of tobacco or
weapons systems, and companies deriving a large amount of revenue from nuclear energy.
Environmentally responsible companies are also proactively sought for investment.
As of
June 30 the top three holdings in Ariel Appreciation were MBIA, Inc. (MBI), Hasbro, Inc. (HAS),
and Equifax, Inc. (EFX).
©
SRI World Group, Inc. All Rights Reserved.
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