Over Time, Social Funds Hold Their Own

Article excerpt

In a murky market, many investors are cleaning up their act.

Forgoing traditional performance-oriented strategies, a growing number of individual and institutional investors are limiting their investment universe to companies and funds screened for social and environmental friendliness. And they're finding that, contrary to popular belief, there are financial rewards.

Assets in socially screened investment portfolios under professional management rose by 36 percent from 1999 to 2001, topping the $2 trillion mark for the first time last year, according to the Social Investment Forum's (SIF) recently released 2001 Report on Responsible Investing Trends in the United States.

"This data would be remarkable at any point of time, but it is particularly striking when you realize that we had bearish markets for most of the time period covered by this study," says Steve Schueth, spokesperson for the forum and president of Colorado Springs-based First Affirmative Financial Network.

Nearly 12 percent of all investment assets now under professional management in the United States are subject to one or more of the main practices associated with socially responsible investing: screening, shareholder advocacy, and community investing.

Broadly defined, socially responsible investing is a process that considers the social and environmental consequences of investments.

Mr. Schueth notes that all social investors are not of one stripe. "There's a wide menu of social issues our investors care about," he says, placing the issues into two primary camps: avoidance and positive screening.

Avoidance means investors keep their money from supporting traditional "sin stocks" or "addictive stocks," such as alcohol and tobacco, and also includes stocks in nuclear-power utilities, weapons manufacturers, or companies with patterns of egregious pollution.

In positive screening, "we're looking for companies that are better than their peers in areas such as employer/employee relations, where minorities and women are represented in management, [and] companies that produce quality products that benefit for society at large," he says. Respect for human rights and sound environmental policies also are considered, among other issues.

And to cater for all of these needs and concerns, mutual-fund investors have a growing range of choices. …