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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.

Since its 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 performance."

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.

"Investing 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 communities."

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.

A 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.

Another recent 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.

 

 
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