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Archive for the ‘bonds’ Category

Here are some funds that you might want to look into (I’ll include information on Vanguard’s S&P 500 index fund (VFINX) for comparison):

Fund Expense Ratio Turnover 5-Year Return 10-Year Return Top Holdings Include
Appleseed (APPLX) 0.90% 128% Too new Too new Pfizer (NYSE: PFE), Coca-Cola (NYSE: KO)
Calvert Social Index A (CSXAX)  0.75%* 14% (0.3%) Too new AT&T (NYSE: T), IBM
Pax World Growth (PXWGX)  1.46% 51% 1.3% (1.1%) Qualcomm (Nasdaq: QCOM), Cisco (Nasdaq: CSCO)
Domini Social Equity (DSEFX) 1.15% 9% 0.3% (2.0%) IBM, Amgen
Winslow Green Growth (WGGFX) 1.40% 113% 0.8% Too new First Solar (Nasdaq: FSLR), LSB Industries
Vanguard 500 Index Fund 0.16% 6% 1.2% (0.9%)  
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Listed below are standout SRI funds that I feel are well positioned to gain from the current economic environment.  These mutual funds and ETFs are grouped into different categories that reflect their holdings, strategy, and geographic region.  I also include categories that are unique to responsible investing such as environmental activism, humanitarianism, community development, and alternative energy.  With over $2.71 trillion is assets subject to social criteria and over 260 socially monitored funds, it can be difficult to navigate all the options out there. 

I’ve picked the following funds based on a number of fundamental criteria such as management track record, MPT statistics, and industry outlook.  However, the “niche” nature of each SRI sub-categories must be taken with a grain of salt due to the lack of competition.  The youthful nature of many funds in this sector also hiders forecasting. 

An important litmus test for any “alternative fund” requires determining if management has jumped on the “green bandwagon” for short-run gain.  Unfortunately, this last quarter has seen a number of self proclaimed SRI funds mislead investors.  To ensure these imitation funds don’t show up on my list, I’ve dug into each fund’s holdings to confirm consistency with the fund strategy.  Ultimately, I’m looking for funds that demonstrate a long-run commitment to well articulated objectives that are consistent with socially responsible investing.        

These “top picks” are not a static snapshot of the current SRI industry.  Rather, it is an evolving list that I hope to refine over time.  I welcome suggestions and recommendations.

Alternative Energy/ Resource

  • PowerShares Wilderhill Clean Energy Portfolio Fund (PBW)
  • Van Eck Global Alternative Energy (GEX)
  • PowerShares WilderHill Progressive Energy Portfolio (PUW)

Global/International

  • Calvert International Opportunities Fund (CIOAX)

Fixed income (Bonds)

  • Calvert Social Investment Bond A (CSIBX)
  • AHA Full Maturity Fixed Income Fund – Institutional Class (AHFMX)
  • AHA Limited Maturity Fixed Income Fund – Institutional Class (AHLFX)

Equity Large Cap.

  • Calvert Large Cap Growth I (CLCIX)
  • Pax World Growth (PXWGX)
  • MMA Praxis Growth Index Fund A (MGNDX)

Balanced Funds

  • Walden Social Balanced Fund (WSBFX)
  • Calvert Social Investment Equity Fund (CSIEX )
  • Pax World Balanced (PAXWX)

Environmental

  • Winslow Green Growth (WGGFX)
  • Portfolio 21 (PORTX)

Technology

  • Clean Edge U.S. Liquid Series Index Fund (QCLN)
  • PowerShares Cleantech Portfolio (PZD)

Religious Funds

  • Guide Stone Int’l Equity GS4 (GIEZX)
  • Amana Trust Growth (AMAGX)
  • Amana Trust Income (AMANX)
  • New Covenant Funds (NCGFX)
  • Ave Maria Mutual Funds (AVEGX)
  • LKCM Aquinas Fixed Income (AQFIX)
  • LKCM Aquinas Value (AQEIX)

Copyright © 2008 David van der Roest

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As bond funds and foreign debt are becoming more accessible to the average-Joe investor, the fixed income industry has overlooked some fundamental social considerations.  In many cases, fixed income is seen as a more passive alternative when compared to equity markets.  Upon further inspection, it becomes clear that a lack of social due diligence regarding your bond portfolio can lead to the same social pitfalls as a hastily selected stock portfolio.    

 

In my opinion, there are two main mistakes that even the sincerest investor could make when selecting bonds.  Fortunately, there are some valuable resources available to help prevent oversight.  The following examine the social pitfalls and then looks at practical solutions for every-day investors:

  

                Corporate Debt:

It is important to be wary of corporate debt that may support firms that leverage questionable labor practices.  This is most prevalent in unregulated emerging economies where astronomical GDP growth is overshadowing labor issues that include high risk activities and child labor.  Today, the returns coming from developing economies can cloud even the most grounded fund manager’s judgment. 

 

Many international organizations and think-tanks are striving to keep pace with developing economies by creating new and updated labor indices to assist investors with ethical decision making.  I have aggregated some of the leading labor indices and databases for reference:   

 

·        International Labour Organization Child Labour Database

·        The US Bureau of International Labor Affairs

·        Calvert Social Index (great for on-shore portfolios) 

 

Emerging Sovereign Debt:

The second pitfall looks at emerging sovereign debt and examines how government policies affect humanitarian issues within their state.  It is important to realize that taking on the debt of emerging counties indirectly supports their human rights policies and foreign policies.  As responsible investors, we need to be aware of a nation’s humanitarian track record before picking up foreign treasuries or similar types of debt.  Listed below are some useful resources to assist in the social due diligence process:

 

        ·       Universal Human Rights Index of the United Nations

·        Freedom of the press Scale

·        Political Terror Scale 

 

I’m currently aggregating a list of my 10 favorite socially responsible funds and portfolio managers.  I’m hoping to get these posted soon.  These two top-ten lists will be a great way to augment the social and political indexes listed in this post. 

 

Copyright © 2008 David van der Roest

 

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