Picking Winners

202 funds to choose from: Who are the best?

There are three ways to pick winners in socially responsible investing. Do the social screens first and then the investment screens, the other way around, or both at the same time. Which method does best? It's hard to say. There are very few, if any, studies available in this area. Here's a look at one global equity fund for each process:

  • Social screen first: Portfolio 21 has had an annual return of 13.98 percent for the last three years. This compares favorably with the S&P 500 and poorly with the MSCI-EAFE.
  • Financial screen first: Citizens Funds Global Equity A has had an annual return of 8.08 percent for the last three years. This compares neutrally with the S&P 500 and poorly with the MSCI-EAFE.
  • Both screens simultaneously: Calvert World Values International Equity has had an annual return of 12.91 percent for the last three years. This compares favorably with the S&P 500 and poorly with the MSCI-EAFE.

It's not a thorough analysis by any means, but it certainly provides evidence that performing the social screen first does not dramatically affect the annual returns of mutual funds. That's encouraging for anyone interested in socially responsible investing.

In addition to mutual funds, ETFs investing in socially responsible companies are becoming popular. One to note: the Powershares Wilder Hill Clean Portfolio. This ETF is based on the index of the same name. The index itself has performed favorably to the S&P 500 over the last three years. The ETF has been existence since 2005 and has underperformed the S&P 500. Other areas outside ETFs and mutual funds but more specialized include hedge funds, venture capital and private equity. Those should only be explored if you are an experienced investor.

For those investors with enough capital to hire a money management firm, there are several resources available to locate an adviser near you. Appendix 4 of the 2005 Report on Socially Responsible Investment Trends in the United States should be able to point you in the right direction. Additional sources of information for those wanting to know more about the subject in general should go to the following sites:

  • Social Funds: In existence since 1999, they've become an authoritative resource for anyone interested in socially responsible investing.
  • Social Investment Forum: This is a nonprofit site promoting the idea of socially responsible investing.
  • Henderson Global Investors: Even though this is a European money manager, their SRI information is quite interesting.

Picking socially responsible investments is no different than any other. You must perform the necessary research before investing and then let time take care of the rest.

Advertiser Links for Picking Winners [what's this?]
Unsubscribe
First Name:
Last Name:
Email Address:
ZipCode:
Send me info from partners: