Putting investments behind your convictions

Your Money

August 01, 2004

From corporate ethics to same-sex marriage, from religion to war, todayM-Fs discussion topics evoke deep passions. Too often personal beliefs deteriorate into polarizing buzzwords and fruitless debate.

So a growing number of investors have been quietly putting their money where their convictions are. TheyM-Fre investing in one of more than 200 M-tsocially responsibleM-v mutual funds that have attracted more than $150 billion in assets by investing in what they admire and avoiding what they donM-Ft.

Take religious beliefs, for example. Catholicism and Islam each provided a top-performing fund over the past 12 months.

Ave Maria Catholic Values Fund, which invests based on what its Catholic advisory board considers to be in keeping with its religious principles, was up 24.15 percent.

M-tWe call it a morally responsible fund,M-v explained George Schwartz, co-portfolio manager. M-tItM-Fs Catholic, so we screen out companies related to abortion, pornography, contributors to Planned Parenthood and companies that offer employees nonmarital partner benefits.M-v

The fund profited from quality firms Coach Inc. (COH) in leather goods and Fortune Brands Inc. (FO), whose products include Jim Beam whiskey. It doesnM-Ft screen out alcohol.

Amana Mutual Funds Trust Income, approved by the North American Islamic Trust, was up 22.17percent.

M-tWe invest according to our scholarsM-F interpretation of the Quran, which means we canM-Ft buy anything making money from interest or bonds,M-v said portfolio manager Nicholas Kaiser. M-tRestrictions are that we avoid industries such as those in gambling, alcohol or pornography.M-v

Largest holdings include international oil giants Exxon Mobil (XOM) and BP PLC (BP).

M-tThereM-Fs no reason to give up performance if youM-Fre a socially conscious investor,M-v said Steven J. Schueth, past chairman of the Social Investment Forum and president of First Affirmative National Network in Boulder, Colo. M-tThat is proven by practical experience and academic studies over the past 10 years.M-v

The nonprofit Social Investment Forum (www.socialinvest. org) provides comprehensive information on socially responsible funds.

Corporate governance is the latest hot button, but workplace diversity, defense contractors, nuclear power and handguns are other popular screens. Always study investment basics and compare performance with other funds in its investment category.

M-tSocially conscious funds can be large-cap, small-cap or international, so ask questions about a fundM-Fs style, manager and expenses just as you would in picking any fund,M-v warned William Samuel Rocco, senior analyst with Morningstar Inc. in Chicago.

The Timothy Plan Small-Cap Value Fund provided a 21.89 percent gain over 12 months by investing in good corporate citizens Brinks Co. (BCO), the armored car and security company, and the PMI Group Inc. (PMI), a financial guarantor.

The Timothy PlanM-Fs president, Arthur Ally, said screens include abortion, pornography, alcohol, tobacco, casino gambling and M-tactive promotion of the homosexual agenda.M-v

M-tOur fund has gotten a lot more attention as investors have become more aware of corporate governance in the post-Enron world,M-v observed James D. Awad, portfolio manager. M-tThat and considerations such as diversity and community participation by management are core beliefs of our fund.M-v

Calvert World Value International Equity Fund was up 21.30 percent, and Calvert New Vision Small-Cap Fund gained 19.44 percent over 12 months. That fund familyM-Fs criteria include international human rights, product safety and corporate philanthropy.

M-tCalvert has a research department on the social screen side looking at factors such as the environment, workplace and community relations,M-v said John Montgomery of Bridgeway Capital Management, a Calvert adviser. M-tThen, when we invest, we just try to pick one good company at a time without worrying about the economy or market.M-v

The Ariel Fund, up 21 percent over 12 months, invested in advertising company Interpublic Group of Companies Inc. (IPG), which has an in-house diversity director, and bank Northern Trust Corp. (NTRS), which improved minority employee representation.

M-tWe are set up to be a little bit more active to reward companies that do well, and we must always balance the core idea of investing vs. forcing effective social change,M-v said Timothy Fidler, ArielM-Fs research director, whose criteria include civic responsibility, the environment and nuclear power. M-tWe aim for high-quality companies that are stable, consistent and predictable.M-v

Andrew Leckey is a Tribune Media Services columnist. Email him at yourmoneytribune. com.

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