Newspaper article The Christian Science Monitor

More Mutual Funds Let Investors Put Their Money Where Their Hearts Are

Newspaper article The Christian Science Monitor

More Mutual Funds Let Investors Put Their Money Where Their Hearts Are

Article excerpt

UNITED States investors whose sentiments lie with Israel now have a way to support the country with their wallets, not just their hearts.

The Evanston, Ill.-based Israel Growth Fund, the first open-end mutual fund to invest in Israel, is one of a growing number of "socially conscious" funds in the US. Since 1990, the number of funds that invest in companies that further peace, promote the interests of women and minorities, respect the environment, or observe the dictates of Islam, has more than doubled to 29. One-half of the newcomers have opened for business just in the last 15 months, according to Laura Lallos at Morningstar Inc., a mutual fund analysis firm in Chicago.

The San Francisco-based Women's Equity Fund, for example, invests in companies that take steps to "empower" women. It eschews firms that run sexist advertising or that fail to treat female employees and consumers in a progressive way. After one year of operation, the fund has assets of about $1 million.

Investors who invest both for profit and a clear conscience generally trail the average gains of less-discriminating investors. But the lag is due more to mediocre management than to the fact that the funds strictly screen companies, Ms. Lallos says.

Socially conscious funds differ widely in the boundaries they set for investment. The Calvert and Working Assets fund groups both invest in companies that promote the interests of women and minorities and contribute generously to charity. The funds do not invest in firms that are insensitive to the environment or are connected to the military. Their aversion to securities tied to weaponry is so strong that they snub US treasuries.

"These funds have very, very hard-core lists of what they are looking for and what they are not looking for," Lallos says. "They will appeal to people with liberal political beliefs."

In contrast, the managers at the Dreyfus Third Century Fund do buy treasuries, affirming their belief that support for national defense is not necessarily irresponsible. Laidlaw Covenant also casts a broader net by investing in companies capitalized at more than $2.6 billion. Such companies are often excluded from stricter funds because of their less- exacting environmental standards compared with smaller firms.

On the other side of the spectrum, the Amana Mutual Funds Trust follows strict standards in screening companies. …

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