May 05, 2003
The Switch to Socially Responsible Investing Affords Choice and Confers Power
by William Baue
The continuation of one investor's story of how he chose SRI mutual funds, and his reflections on
the power of socially responsible investing (part two of a two-part article).
Brian P. Fisher recently completely switched his portfolio to socially responsible mutual funds
one of this article). By conducting careful research, he was able to create a socially
responsible investment (SRI) portfolio that meets his financial and social goals.
"I tried to get a diversified portfolio that mirrored what I had before," Mr. Fisher
told SocialFunds.com. "I based my decisions on the fund's longevity, manager profile and tenure,
turnover ratio, and expense ratio. Also, I won't go in a loaded fund, but there were enough
options of no-load SRI funds that I felt comfortable."
Mr. Fisher investigated which SRI
funds best fit his criteria and which did not. A key point for him is the fund's track record.
His previous funds were large, well-known names such as the Fidelity Magellan (ticker: FMAGX), the
Fidelity Contra Fund (FCNTX), and the Janus Fund (JANSX). All of these funds have existed 15 years
Mr. Fisher chose to invest in the Ariel Appreciation (CAAPX) and
Fund (ARGFX), "both because they've been around a while and they have excellent performance
records," he said. He also chose the Neuberger Berman Socially
Responsive Fund (NBSRX) and the Parnassus Equity Income
(PRBLX). His final choice was the Pax World Balanced Fund
(PAXWX), "the one that's been around since 1971, and that's exactly why I picked it," he said.
"For a fund to last that long and yield such performance numbers is amazing. It's my new
Mr. Fisher also wanted to avoid paying an arm and a leg to transfer from
mainstream to SRI mutual funds.
"I'm in Fidelity, which has this funds network that
includes thousands of investment companies," said Mr. Fisher. "There's no transaction fee [NTF]
for transferring to a mutual fund included in the Fidelity Funds Network. That was actually
another one of my criteria as well: if it was an NTF fund, I would look at it, if it wasn't, I
"But most of the SRI funds were NTF, so I was able to make the switch pain-free
and cost free," Mr. Smith added. "There were absolutely zero fees that I incurred."
Fisher avoided funds with social criteria that he considered too lenient. For example, he decided
not to invest in funds that did not have a weapons and military contracting screen. However, he
also avoided funds with social and environmental criteria that he considered too stringent.
"I would rather have the criteria be broadly limiting to give the [fund] manager more leeway,"
Now that Mr. Fisher has made the commitment to socially responsible investing, he
wonders why he didn't align his investments with his values sooner, and has come up with several
"I thought their screens were going to be more limiting, and therefore that
their performance would be much weaker," Mr. Fisher said. "Also, there's very little publicity and
documentation in the mainstream about how these funds perform."
Mr. Fisher noted that SRI
funds tend not to be on the radar screen of most financial advisors.
"I've worked with
investment professionals at all levels, and they've never even asked about my social or
environmental priorities," he said. "Aren't those key questions?"
Mr. Fisher also
recognizes the value of holding stock in companies that don't reflect SRI values for the specific
purpose of conducting shareowner action to effect change.
"Even if we invest in companies
whose practices we don't agree with, we can certainly sway them to adopt practices that are
socially and environmentally friendly," Mr. Fisher pointed out. "So you do have that power."
"I'll never switch from SRI," Mr. Fisher concluded. "Knowing that there are so many
options in SRI funds, I would never invest in a non-SRI fund."
See part one of this article.
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