Mutual Funds would be an excellent way for those of us with very little time to do our research, pick investments, make timely trades, diversify, and keep track of our investments........however:
Over a decade ago when I was young and innocent, I was paging through the portfolio of my new Dreyfus Third Century Fund looking over the list of “socially responsible companies.” I was stunned to find a well known Las Vegas gambling casino corporation listed. I sold the fund immediately (& didn’t see this fund listed with the best known SRI funds anymore - either).
Three years ago this month, Paul Hawken did an exhaustive job researching the over $2 trillion worldwide SRI industry including over 600 funds & discovered that SRI Funds as a whole did NOT invest in portfolios much different than conventional ones. [Socially Responsible Investing: How the SRI industry has failed to respond to people who want to invest with conscience and what can be done to change it.] Its a sad tale.
For example, he listed the 30 top equity holdings by American SRI funds with the 30 companies in the Dow Jones Industrial Average. The 19 companies on both lists included General Electric, Pepsico, Pfizer (Viagra, etc.), Coca-Cola, Wal-Mart, and Exxon-Mobil. This is certainly not a list of SRI heroes.
Also, Coca-Cola was held by 56 SRI funds studied, Halliburton by 23, McDonald’s by 41, Raytheon (weaponry) by 12, and Monsanto by 19.
Hawken also cites examples of how Pax World, the very first SRI mutual fund, held stocks in corporations whose deeds are in direct contradiction of 12 vaunted SRI principles.
While Hawken condemned practically everyone, I assume some of these funds do read their own criteria & follow them (New Alternatives Fund for example). The Natural Capital Institute , which Paul is associated with, lists both the above report AND useful information about a choice group of SRI funds, so we can assume he must now consider some SR funds as acceptable investments. [see http://www.responsibleinvesting.org/]
The good news is that most of these funds have their current holdings listed on their websites, so we can see for ourselves who they invest our money in. As long as we don’t expect to like every listing, it is a decent alternative to conventional funds.
Note: Mutual funds have ticker symbols just like stocks and can be looked up on many financial sites/sections on the web.
