Smith Barney Fund Drops Tobacco, Weapon Stocks
Van Allen, Peter, American Banker
Smith Barney Inc. has become the first national brokerage firm to offer a "socially responsible" mutual fund that gives the cold shoulder to manufacturers of weapons and cigarettes, among other products.
The firm said its Concert Social Awareness Fund avoids investing in companies that create "a negative social impact," citing the tobacco and defense industries and owners of nuclear power plants.
The Social Awareness fund, with $382 million in assets, is an adaptation of Smith Barney's Strategic Investor Fund, which had a three-year annualized return of 11.41% and a Morningstar rating of three stars at yearend.
Smith Barney, a unit of Travelers Group, is the largest of a growing number of investment companies to respond to the demand for funds with "socially responsible" investments.
There are 45 such funds, all of which were started in the past three years, said Steve Schueth, president of the Washington, D.C.-based Social Investment Forum, with 400 member investment companies.
The industry has "seen quite a lot of growth in socially responsible funds - tremendous growth," said Mr. Schueth, who is also president of Calvert Distributors, a unit of Bethesda, Md.-based Calvert Group, the largest provider of such funds. Calvert Group has eight "socially responsible" funds, with $1.8 billion in assets.
Others fund companies offering a range of such funds include Citizens Trust, Portsmouth, N.H.; First Affirmative Financial Network, Colorado Springs; and Progressive Asset Management, Oakland, Calif.
In addition to producers of tobacco, liquor, weapons, and the like, such funds often avoid the stocks of companies with poor labor or environmental records, Mr. Schueth said.
He describes the process of identifying socially responsible companies that perform well on the stock charts as finding "the double-bottom line."
"We find that progressive companies in the long term perform better," said Mr. Schueth.
Mutual funds have traditionally poured billions of dollars into "sin" stocks, including tobacco companies. …