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March 11, 2008
EarthFolio Screens the Big SRI Picture
    by Anne Moore Odell

New investment site offers fully managed SRI portfolios for every type of investor, from timid to tenacious.


One short questionnaire later, visitors to the newly launched EarthFolio website are matched to a SRI portfolio based on their investment needs and style: conservative, balanced, growth, or aggressive growth. Available for investors in all fifty states from Blue Marble Investments, EarthFolio bills itself as the first online site to offer fully managed portfolios composed of socially responsible mutual funds.

EarthFolio's managers believe that its simplicity and convenience will draw customers. Arturo Tabuenca, founder and portfolio manager, told Socialfunds.com: "Unless you're a large institutional investor, it's still extremely difficult to find professional guidance when it comes to socially responsible investing. A recent survey by Allianz reveals that although 71% of investors classify environmental technology as a 'buy,' less than one out of five investors has ever had an environment related investment opportunity recommended to them by their advisor."

Tabuenca continued, "EarthFolio solves this issue by providing ongoing professional management that specializes on SRI issues and delivers it through the convenience of the Internet."

EarthFolio applies financial, social, and environmental screens to the mutual funds it purchases. The twelve SRI screens it uses (beyond the financial screens it applies) include the environment, human rights, animal testing, employment equality, labor relations, weapons, tobacco, alcohol, gambling, products and services, corporate governance, and community investment.

EarthFolio also considers a mutual fund's record of shareholder advocacy in the twelve areas of SRI interest. The EarthFolio website allows visitors to select any of the SRI areas and read more about what funds are doing to engage companies, from filing resolutions at fast food companies asking for more humane methods of slaughtering animals to addressing predatory lending practices at major financial institutions.

The EarthFolio Conservative Portfolio is calculated to provide regular income or gradual growth. As of its last balancing at the end of 2007, it was 56% bonds and 28% US stocks. Portfolio mutual funds holdings include Sierra Club, Domini and Calvert. EarthFolio furthermore provides the top 20 stocks overall and the top 20 sustainable stocks in the four portfolios. In the Conservative portfolio, some of the top 20 sustainable stocks include First Solar, Whole Foods Markets, and Herman Miller. The Conservative Portfolio was the last of the four portfolios created, launched in October 2005.

The EarthFolio Balanced Portfolio, launched in March 2001, holdings include the mutual funds MMA Praxis, Vanguard, and Powershares. Some of its top sustainable stocks include Plug Power, Ballard Power Systems, and Acciona Group. Its objective is long-term growth with downside protection.

The EarthFolio Growth Portfolio was launched in November 2000 and has seen a cumulative return since inception to the end of 2007 of 42.37%. It is composed of 70% equity/30% fixed income with the objective of superior long-term growth. Some of its mutual funds include Ariel Mutual Funds, Calvert, and Citizens Fund. Evergreen Solar, EOG Resources, and Interface are found among its top 20 sustainable stocks.

The EarthFolio Aggressive Portfolio is geared toward maximum long-term growth. Started in November 2001, the portfolio is composed of 100% equity. Its yearly return in 2007 was 3.70% against the portfolio benchmark S&P 500's return of 5.5%. Overall since inception the cumulative return of the Aggressive Portfolio is 44.08%. Mutual funds represented include Portfolio 21, Powershares, and Winslow Green Growth Fund.

Besides the ease of a one-stop shop site, EarthFolio also distinguishes itself with its low fees, which are scaled to the size of the investment. All four portfolios have a minimum account size of $50,000 with a one-time account set-up of $249 and a yearly advisory fee that is determined by the portfolio type and the assets invested. For accounts from $50,000 to $3 million there is a tiered advisory fee and for larger accounts of $3 million or more, there is a flat annual fee. All the annual fees are less than 1%. For example, the first $200,000 in a Conservative Portfolio there is a .70% annual fee while the aggressive portfolio fee for the first $200,000 is 1%.

"EarthFolio has one of the lowest cost structures for a professionally managed portfolio," said Tabuenca. "Other than the underlying mutual fund expenses, the portfolios carry no loads, no transaction fees and no custodial fees. Instead, there are only two straightforward fees: A one-time account set-up charge of $249 and then an ongoing yearly fee of 1% or less. This cost structure allows for much greater portfolio diversification and the ability to continually update and monitor the portfolios without any added costs to the investor."

EarthFolio is registered under Blue Marble Investments, which Tabuenca founded in 2000. Blue Marble is dedicated exclusively to serving socially responsible investors. Currently it serves clients in 29 states and has licensed its EarthFolio models to over 4,000 investment advisors. This is the first time that Blue Marble has made its portfolios available online.

"There's a quote by Alan Kay that says, 'The best way to predict the future is to invent it.'," said Tabuenca. "To me this is the key to not only solving the daunting challenges that we face, but just as importantly, the key to unlocking the immense potential that a sustainable economy has to offer. For instance, a lot is made about how we can transition to a clean and independent energy grid-and that's a welcome change. But it's not simply about getting more and more energy. It's about rethinking why we need so much energy in the first place. Companies and industries that understand this whole systems approach to the world and business will be the titans of the 21st century."

 

 
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