December 21, 2009
Domini Social Equity Fund Outperforms S&P 500 Through November, 2009
by Robert Kropp
The socially responsible investment fund reports return on investment of 31.43% through November
30, outperforming the S&P 500 by more than 7%.
In the wake of last year’s economic meltdown—a meltdown forewarned by many in the socially
responsible investing (SRI) movement, who had raised alarms for years over the financial shell game
of packaging unsustainable subprime mortgages as securities—an increased emphasis on the
consideration of environmental, social, and governance (ESG) criteria in investment strategies has
gained wider currency.
Given the long-term investment horizon espoused by many who
employ ESG considerations in their investment decision-making process, it is still far too early to
discern if such factors will lead to outperformance over five or ten years. But as an early
indicator of such a strategy, the year-to-date performance through November 30 of the Domini Social
Equity Fund provides signs of positive growth.
Managed by Domini Social Investments, with Wellington Management performing as submanager—the Fund has
been actively traded since November, 2006—, the Domini Social Equity Fund posted returns of 31.43%
through November 30, outperforming the S&P 500 by more than 7%.
The one-year returns
posted by the Fund have been even more impressive. Its gain of 34.73% over one year outpaced the
S&P 500 by more than 9%.
The Domini Social Equity Fund invests primarily in stocks of
large-cap US companies, which are screened against Domini’s social and environmental standards to
assess the quality of a corporation’s relations with communities, customers, ecosystems, employees,
investors, and suppliers. As of November 30, the Fund’s largest holdings were Johnson & Johnson,
IBM, and Microsoft.
The Fund’s top sector weightings were Information Technology,
Financials, and Health Care.
A significant aspect of Domini’s mission for the last 15
years has been shareowner activism, and 2009 saw the filing of its 200th shareowner resolution.
Resolutions filed in 2009 addressed freedom of expression and privacy on the Internet, and
predatory credit card practices. Domini also worked with the Securities and Exchange Commission
(SEC) to require companies to report on their impact on society and the environment, and increase
proxy access by shareowners.
ProxyDemocracy, which publicizes the intended votes of
institutional investors with a track record of shareowner engagement, ranked Domini in the 90th
percentile in the areas of Directors, Executive Compensation, Corporate Governance, and Corporate