sri-advisor.com
where checking accounts rebuild communities
Back to homepageInstitutional ReportsSRI Financial Professionals DirectoryToolsNewsSRI Performance and TrendsAbout Us   
News


November 26, 2001
Bond Funds Thrive in the Bear Market
    by William Baue

The Calvert Social Bond fund and the Aquinas Fixed Income fund perform well both in the short and long term, stabilizing portfolios in this unstable market.


The market transformation from bull to bear in 2000 accentuated the importance of diversified portfolios invested not only in equity, but also in fixed income bonds. Two such fixed income mutual funds in the socially responsible investing category, the Calvert Social Investment Fund Bond Portfolio (ticker: CSIBX) and the Aquinas Fixed Income fund (AQFIX), have been outperforming most of their peers, both in the short and the long term. All figures quoted in this article derive from information provided by Wiesenberger, and are current as of October 31, 2001.

"Historically, bonds have been less volatile than stocks," says Calvert's Social Bond Fund Portfolio Manager Greg Habeeb. "After the largest stock bull market in history, the markets are now rebalancing, and those who own bonds have more of a cushion in their portfolios."

However, the Calvert Social Bond and the Aquinas Fixed Income Fund offer more than just a cushion of fixed yields-they've been offering substantial returns as well.

The Calvert Social Bond, administered by the Bethesda, Maryland-based Calvert Group, has a one-year return rate of 16.72 percent, making it the second-best performer after the Parnassus Fixed Income fund (PRFIX) in the short term. In the long term, however, the Calvert Social Bond is the top performer, generating a 7.9 percent return over three years and a 7.55 percent return over five years. Calvert's Manager of Corporate Communications Elizabeth A. Laurienzo attributes the Social Bond's success to Calvert's unorthodox investment style.

"We apply a relative value approach, which means we look for quality bonds that are cheaply priced," says Ms. Laurienzo. "Our goal is to pick up incremental yield without putting ourselves in high-risk situations. The key to this is identifying undervalued stories, which can include sectors and companies overlooked by other investors, or securities that are undervalued because of their unusual structure."

The Calvert Social Bond incorporates both positive and exclusionary screens on a six-pronged list of issues, including the environment, human rights, product safety, labor relations, weapons contracting, and the rights of indigenous peoples. The fourteen-year-old fund is among the oldest of socially responsible mutual funds.

Over the three-year term, the Calvert Social Bond outperformed 96 percent of other long-term corporate general bond mutual funds. And over the one-year term, it outperformed 97 percent of its peers.

On a one-year basis, the Parnasus Fixed Income fund outperformed 98 percent of other intermediate-term corporate general bond mutual funds. However, it has not done as well comparatively over the long term. Parnasus Fixed Income is absent from Wiesenberger's top-ten list by percentile ranking for both three and five years, with returns of 4.83 percent and 6.41 percent, respectively.

The Aquinas Fixed Income fund, administered by Dallas-based Aquinas Funds, is an excellent long-term performer that isn't slouching on the short-term either. It generated a three-year return of 5.91 percent and a five-year return of 6.65 percent, second only to the Calvert Social Bond among fixed income social mutual funds. In terms of its percentile ranking amongst other long-term corporate high-quality fixed income mutual funds on a one-year basis, it outperformed 91 percent of its peers.

"Not only are we a high-quality fund, we are also 100 percent investment grade," says Aquinas Funds President and CEO Frank Rauscher, distinguishing the Aquinas Fixed Income fund from its peers. "Many 'high-quality funds' actually have a percentage of junk bonds in their portfolio," he continued.

Aquinas Funds follows the Catholic investing guidelines of the National Conference of Catholic Bishops. It supports such measures as affordable housing while censuring discrimination and the manufacture of weapons of mass destruction. Most notably, it opposes abortion and contraception.

With such rates of success, neither the Aquinas Fixed Income not the Calvert Social Bond funds foresee making radical strategic changes. According to Ms. Laurienzo, Calvert will be "sticking to our guns: seeking out relative value."

 

 
Home
| Reports | SRI Financial Professionals Directory | Tools | News | SRI Performance and Trends | About Us | Contact
© SRI World Group, Inc. - All rights reserved
Terms of use - Privacy Policy - OneReportTM Network