August 10, 2004
CRAFund Goes Retail
by William Baue
Formerly available only to institutional investors, the Community Reinvestment Act Qualified
Investment Fund is now available to individuals through Charles Schwab.
Today, individual investors have a new (though time-tested) vehicle for making community
investments. Until now, only institutional investors could invest in the Community Reinvestment
Act Qualified Investment Fund (ticker: CRAIX), or CRAFund, one of
the only mutual funds in the US devoted exclusively to community investment. To date, 250
institutional investors with $1.6 trillion in combined assets have invested in the fund, which
currently has $475 million in assets. Now, the fund is available to individual investors on the Charles Schwab Mutual Fund OneSource platform, a
no-load, no-transaction fee service with a minimum investment of $2,500.
inception nearly five years ago (August 30, 1999), the CRAFund has generated annualized returns of
6.27 percent as of July 31, 2004, and its three-year annualized return rate is 5.37 percent. This
strong performance helped place the CRAFund in the ranks of "Lipper Leaders" for total return and
consistent return, placing it in the top 20 percent amongst the 79 mortgage funds in its category
as of March 31, 2004. Lipper is a
Reuters-owned firm that tracks 80,000 mutual funds worldwide.
"Until now, 'community
investing' has been viewed as a philanthropic endeavor where investors had to accept below market
returns," said Barbara VanScoy, managing director of CRAFund Advisors, registered investment advisor to the Fund.
"Now, however, investors have options to enhance their communities without sacrificing
Charles Schwab currently hosts six million client accounts, and 5,700
fee-based advisors utilize Schwab for client trade, so offering the CRAFund through Schwab's
OneSource service greatly increases its exposure and potential client base.
in a CRA fund enables individuals to make a difference in their community,” said Eric
Johnson, vice president, community development manager, and CRA officer at BankUnited, the largest Florida-based banking institution and
a shareholder of the Fund. "The increased participation in these types of funds shows that
investors are interested in programs with social payoffs."
Named after the federal
Community Reinvestment Act of 1977 (CRA), the CRAFund seeks to provide equal access to
credit and capital for low- and moderate-income families, who are typically underserved by
mainstream financial institutions.
"In today's environment of shrinking social programs,
products like the CRA Qualified Investment Fund help fill the gap and provide capital to families
and communities in need," said Steve Schueth, President of First Affirmative Financial Network (FAFN), a financial advisory firm
specializing in socially responsible investing (SRI). "And with competitive financial performance,
we can use vehicles like the Fund to enhance the value of our clients' portfolios while enhancing
Since its inception, the CRAFund has directed nearly $900 million to
community development, supporting the generation of 61,515 affordable rental-housing units, 2,159
homes for low- to moderate-income families, and 1,285 affordable health care beds.
recent example of CRAFund community investment includes the purchase of a stake in a $1.4 million
bond issued by the Texas Workforce Commission (TWC) to help alleviate the state's high unemployment rate.
The bond will help extend welfare benefits, which include training and placement services, job
search resources, and subsidized childcare services.
“Losing a job delivers a
devastating blow to a person’s self esteem and financial status, so it’s essential that
unemployment programs and benefits are readily available when needed, and that they incorporate
practical ways of getting people back to work,” said Ms. VanScoy.
example includes a bond purchase in the Seattle Council of the St. Vincent de Paul Society. The
purchase assisted the Catholic-based charity in expanding its network of six thrift stores,
including the opening of a seventh. In addition, it helped the Seattle St. Vincent de Paul chapter
expand its mattress factory and create jobs for needy residents of King County, Washington,
approximately 130 of whom already benefit from its employment and job training programs. Although
it is a denominational charity, St. Vincent serves individuals in need regardless of their faith,
race, or ethnicity.