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October 02, 2002
Innovative Community Investment Fund Attracts Institutional Investors
by William Baue
The CRA Qualified Investment Fund, originally established to help banks fulfill a federal mandate
for community investment, now appeals to a broader range of institutional investors.
SocialFunds.com --
Congress established the Community Reinvestment Act (CRA) in 1977 to require banks with assets
greater than $250 million to invest in projects that help low- and middle-income families in the
banks' own geographic regions. Weston, Florida-based CRAFund Advisors established the CRA Qualified Investment Fund
(ticker: CRAIX) in 1999 to fulfill this mandate through its Direct Impact Investing approach.
Direct Impact Investing enables banks to invest in securities that meet CRA requirements. Since
its inception, the fund has generated such attractive returns that institutional investors with no
federal community investing mandate have similar investments through CRAFund Advisors.
 "It's not often that you come across a money
management firm that raises the bar for how to invest responsibly, but that's just what CRAFund
Advisors has done," said Luther Ragin, Jr., vice president of social investing at the F.B. Heron
Foundation. CRAFund Advisors manages a separate bond account similar to the fund for this $260
million charitable organization. "Now, we're earning returns in line with financial benchmarks
while advancing our organization's mission."
The fund's financial performance is
competitive with other fixed-income investments: as of August 31, 2002, its year-to-date return was
7.60 percent, and its one-year return was 8.25 percent. With the recent addition of Wells Fargo (WFC) as a client, the
portfolio's assets broke the $200 million mark.
"As per the Morningstar website, we are
in the top 5 percent for year-to-date and the top 10 percent for one-year returns compared to
roughly 650 intermediate term bond funds," said Todd Cohen, president of CRAFund Advisors.
The fund's social dividends are also noteworthy.
"To date, client assets invested with
CRAFund Advisors have helped fund almost 10,000 affordable rental housing units, 770 single family
home loans, 550 affordable health care beds, and nearly $31 million in miscellaneous community
development activities," said Mr. Cohen.
The CRA Fund can enable institutions to invest in
certain securities that otherwise have a prohibitively high minimum investment. For example, 11
CRA Fund investors pooled their assets to purchase a $10 million bond issued by the Texas
Department of Housing and Community Affairs (TDHCA). None of these institutions alone could have
invested in this bond. Money from the TDHCA bond is being used to build housing for low-income
Texas families, provide down payment assistance for rural and border-town residents, and assist
disabled homeowners.
The CRA Fund is fulfilling its original mission very successfully.
Of the 30 banking institutions whose CRA Fund investments have been scrutinized for meeting CRA
requirements (as of June 30, 2002), all have passed the examination process.
With this
combined social and financial success, CRAFund Advisors is considering opening up the CRA Fund to
individual investors on the retail level.
"At this juncture, the minimum investment is
$250,000 for all investors; however CRAFund Advisors is exploring the possibility of offering
shares on the Schwab mutual fund platform or making a retail class of shares available," Mr. Cohen
told SocialFunds.com.
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