December 10, 2002
Citizens Funds Launches Two New SRI Mutual Funds
by William Baue
Major SRI mutual fund firm marks 20 years in the business by adding two new SRI funds to its
Last week, New Hampshire-based Citizens Funds
unveiled two new socially responsible investment (SRI) mutual funds to celebrate the twentieth
anniversary of its founding. The Citizens Ultra Short Bond Fund and the Citizens Balanced Fund seek
to take advantage of market conditions now and in the future.
Short Bond Fund is unique to the SRI environment as it is the only offering in its respective
fixed-income category,” said Citizens Product Manager David Budka , “while the Citizens
Balanced Fund is a simple way for shareholders to allocate their investments across stocks, bonds,
and money market securities.”
The idea of launching new mutual funds during a bear
market may seem counterintuitive, but Citizens is banking on the asset growth of SRI mutual funds.
SRI mutual funds seem to be bucking the trend of asset shrinkage among mainstream mutual funds. The
net inflow to SRI mutual funds grew by 3 percent in the first half of the year as compared to an
outflow of 9.5 percent from mainstream mutual funds, according to Lipper data reported by the Social Investment Forum. At the end of the
third quarter of this year, the Social Investment Forum stated that SRI funds continued to outpace
mainstream mutual funds.
"Citizens has a long-standing tradition of offering socially
responsible investment products that have a broad base appeal across the institutional and retail
shareholder markets we serve," said Sophia Collier, Citizens Funds President. "These new products
are particularly appealing in this volatile market environment, and their launch is a fitting way
to commemorate our twenty years in socially responsible investing."
The Citizens Ultra
Short Bond Fund is actively managed by Susan Kelly. Ms. Kelly aims to provide a higher yield and
return potential than typical money market funds while limiting risk.
will] limit risk by investing primarily in fixed-income securities with various maturities, high
credit quality, and ample liquidity,” Mr. Budka told SocialFunds.com. “The Citizens
Ultra Short Bond Fund seeks a high level of current income consistent with preservation of capital
by investing mainly in domestic, short-duration investment-grade securities. During normal market
conditions, the portfolio is expected to maintain an average duration of approximately one year or
The Citizens Balanced Fund, which will be managed by Susan Kelly along with
Robert Barringer, will be launched later this month. It seeks current income and capital
“It is a diversified portfolio that provides exposure to equity and
fixed-income investments, and offers an avenue to decrease principal volatility in uncertain times,
while pursuing long-term growth of capital,” said Mr. Budka. “The focus of the stock
portion of the portfolio is on large-capitalization, socially responsible companies. The bond
portion of the fund invests primarily in investment grade corporate, agency, and mortgage-backed
Both funds will employ Citizens’ standard screens.
“We look for companies that protect human rights, have a history of environmental
stewardship, and have strong employee and community relations,” said Mr. Budka. “We
will avoid companies that are involved in the manufacturing of specific products that we consider
harmful or irresponsible, such as alcohol, tobacco products, nuclear power, and weaponry. Nor do we
invest in companies that lack diversity on their corporate boards or in their senior
Mr. Budka extrapolated how these screens and other SRI criteria may be
fueling institutional and retail investor interest in SRI mutual funds.
long run, we believe that financially strong companies that have good corporate behavior will also
have superior financial performance, compared to those that lack corporate responsibility.”