It's easier to be socially correct investor

Andrew Leckey

March 24, 1993|By Andrew Leckey | Andrew Leckey,Tribune Media Services

Investing with conscience is undergoing change in 1993.

National and world events are targeting the very taboos that the socially aware have had at the center of their investment philosophies for years.

For example, the U.S. defense budget is shrinking, with an accompanying move away from weapons makers.

Federal "sin" taxes on tobacco and alcohol seem headed upward. Meanwhile, electric utilities aren't building controversial nuclear plants.

And, while still a long way from solving woes tied to apartheid, the South African government may be headed in the proper direction.

"I applaud the changes and believe it's easier and more accepted these days for companies and investors to be socially responsible," observes Jerome Dodson, founder of the 8-year-old Parnassus Fund, up 21.58 percent the last 12 months as it employed social screens on companies whose stock it bought.

"I'm pleased that the stocks of socially conscious companies we hold have gone up in value with election of Bill Clinton as president, though I'm concerned he isn't proposing enough spending cuts."

Dodson, who has never held defense, tobacco, alcohol or nuclear-related stocks, won't invest in firms with South African ties. However, he'd change that position if there was a real joint agreement on power sharing.

His positive screens include finding firms with excellent environmental policies and good treatment of employees. If layoffs occur, levels of severance and benefits are considered.

A new portfolio addition is Groundwater Technology, which cleans up leakage from underground storage tanks and should prosper if Clinton is serious about stricter regulations. Another is Wellman Inc., a plastics recycler.

"To my chagrin, the hypnotic industry of gambling is growing rapidly," Dodson cautions. "It's a serious social problem and I buy no stocks in that industry."

Since individual values differ, screens the funds employ also differ.

"New concerns will always arise to drive investment tied to social issues," predicts Maurice Schoenwald, founder of New Alternatives Fund, organized in 1973 to emphasize firms offering alternative energy sources. "The investor must buy the brand of ethics he's most interested in."

Recent Schoenwald picks are Dames & Moore Inc. in environmental services and Allwaste Inc. in waste removal.

"Our screens are fluid and change with the times, currently ranging from equal-opportunity programs to not testing products animals," says Domenic Colasaccio, portfolio manager of Calvert Social Investment Fund Managed Growth.

Recent portfolio additions are Airgas Inc., a gas distributor, and Chesapeake Corp., a paper company emphasizing recycled stock.

The number of socially conscious mutual funds has grown to more than a dozen with $1 billion in assets, says John Rekenthaler, editor of the Morningstar Mutual Funds investment advisory publications.

"Know exactly what a fund really invests in by looking at its portfolio," he advises. "Of course, examine performance as well."

Socially conscious stock funds ranked by 12-month returns, according to Morningstar, include:

* Parnassus Fund, San Francisco; $64 million in assets; 3.5 percent "load" (initial sales charge); $2,000 minimum; up 21.58 percent.

* Rightime Social Awareness Fund, Wyncote, Pa.; $8.5 million in assets; 3.5 percent load; $2,000 minimum; up 14.68 percent.

* Domini Social Index Trust, Boston; $13.1 million in assets; no load; $1,000 minimum; up 13.08 percent.

* Calvert Social Investment Fund Managed Growth, Bethesda, Md.; $475 million in assets; 4.75 percent load; $1,000 minimum; up 9.70 percent.

* Calvert Social Investment Equity Portfolio, Bethesda; $78.5 million in assets; 4.75 percent load; $1,000 minimum; up 6.94 percent.

* Calvert-Ariel Appreciation Fund, Bethesda; $188 million in as sets; 4.75 percent load; $2,000 minimum; up 6.82 percent.

* New Alternatives Fund, Great Neck, N.Y.; $3.5 million in assets; 5.66 percent load; $2,650 minimum; up 6.39 percent.

* Amana Mutual Funds Trust Income Fund, Bellingham, Wash.; $8.24 million in assets; no load; no minimum; up 5.26 percent.

* Pax World Fund, Wilmington, Del.; $492 million in assets; no load; $250 minimum; up 0.84 percent.

* Dreyfus Third Century Fund, Uniondale, N.Y.; $525.7 million in assets; no load; $2,500 minimum; up 0.23 percent.

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