Matching Money and Morals
Debating socially responsible investing is a bit like arguing whether a glass is half full or half empty. Research has shown that returns from socially responsible investing, or SRI, can be roughly equal to those of index funds. But critics argue that matching index-fund returns isn't good enough, especially given that expenses are often higher for socially responsible funds.
Despite the passionate debate, more investors are opting to marry their money with their morals. Total SRI assets rose more than 258%, to $2.29 trillion, in 2005, surpassing the 249% increase for all assets under management, according to the Social Investment Forum, a nonprofit trade association for the SRI industry.
Investors are choosing funds that exclude "sin stocks" such as Altria (MO), Anheuser-Busch (BUD) and Harrah's Entertainment (HET). Sometimes SRI practitioners go even further by screening companies on the basis of religious beliefs, labor practices and environmental records.
Many investors, however, still are not sure how SRI returns compare with those of other mutual funds, according to a recent survey for Calvert, one of the largest SRI fund companies.And there's the rub: Critics say investing on the basis of morals runs counter to efficient market theory. Indeed, TheStreet.com's own
|SRI Indices v. Vanguard 500 Index
|Fund||Expense Ratio %||1-YEAR||3-YEAR||5-YEAR||10-YEAR|
|Vanguard 500 Index||0.18||11.75||15.97||3.35||8.88|
|Domini Social Equity (based on Domini 400 Social Index)||0.95||10.79||13.77||2.51||8.32|
|Calvert Social Index||0.75||12.75||14.24||1.94||N/A|
|Citizens 300 (based on Citizens Index)||0.9||10.01||N/A||N/A||N/A|
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