Socially Responsible Funds Mature

by Alan Lavine and Gail Liberman

Socially responsible funds formerly avoided sin stocks--companies in the gaming, liquor and arms businesses and companies that did not pollute the environment.

But Anita Green, vice president with the Pax World Funds, Portsmouth, N.H., says many socially responsible mutual funds go beyond traditional social stock picking methods. For example, the Pax World Fund only invests in companies that favor women and minorities. Since its inception in 1971, the balanced fund has grown at a 9.5 percent annual rate.  

The fund owns stocks, such as: Pepsico Inc., which has a number of women and minorities on its board of directors and Johnson & Johnson, which offers diversity as well as good employee benefits.

On the bond side, it favors Jafra Cosmetics bonds because the company is run by women.    

Steve Falci, chief investment officer of Calvert Group, Bethesda, Md., says community investment is one of the fast growing areas of socially responsible investing. Calvert wants to invest in companies that promote communities, small business and housing and international economic development.

Several of Calvert’s funds, including the Large Cap Growth Fund, have outperformed their respectable markets over the past three years. They are powered by stocks, like Apple Computer, Nordstrom, Western Wireless and Marvell Technology.

Alan Lavine and Gail Liberman are husband-wife personal finance columnists, journalists and authors. They are the authors of "Rags To Retirement," published by Alpha Books. Their columns appear in newspapers throughout New England and the Southeast, as well as online. Their commentary on mutual funds and personal finance is carried by 200 radio stations nationwide every Sunday over Business News Network's Charles DeRose Financial Advisor Show. Al and Gail’s new book is "Rags To Retirement:  Stories from people who retired well on much less than you think," published by Alpha Books.

More articles by Al and Gail can be found here.