More people tying their investments to their social agendas

Journal Record, The (Oklahoma City), Feb 20, 2001

NEW YORK (NYT) -- For years, John Rempel struggled to find investments that did not make him feel guilty.

Rempel, a 56-year-old Mennonite minister, had some false starts, once discovering that a mining company in his portfolio did business with a South American dictator. But he was thrilled to find a group of mutual funds designed by Mennonites for Mennonites that shuns military contractors, tobacco companies and casino operators.

Socially responsible investing, as it is called by many investors no matter what their ideology, has been around for decades. But now, as it grows far more popular, it is becoming increasingly customized, with offerings to many faiths and beliefs. Three companies now offer Muslims mutual funds or customized stock accounts that do not invest in banks because charging interest runs counter to Islamic principles. Some of the funds will not even buy bonds.

One fund for Christian Scientists does not buy the stocks of drug manufacturers, medical equipment makers, biotechnology companies or hospital chains. Some funds aimed at socially conservative Christians will not invest in companies that sell alcohol, tobacco or pornography or own casinos, or in medical companies with ties to the performing of abortions. There are also funds for Catholics, Lutherans and Seventh-day Adventists.

One mutual fund will invest only in companies that support gay and lesbian rights; another shuns such companies.

Salomon Smith Barney, owned by Citigroup, even runs a fund for animal lovers, disdaining companies that do not meet Humane Society standards for testing that uses animals, that make hunting and trapping equipment and that sell meat and other animal products. And most such funds avoid tobacco companies.

The trend has entered almost every conceivable field of investment. There are socially responsible funds offering high-yield junk bonds, technology stocks and international stocks, not to mention the stocks of small, medium-size and large companies. There are socially responsible personalized accounts, annuities and money market and venture capital funds.

Clients can use the accounts to pursue their social agenda, down to excising a specific stock that makes them uncomfortable. And for investors lacking the minimum amount for a customized private account, there is Foliofn, an Internet start-up that sells a half- dozen customized socially responsible portfolios.

The many new opportunities are a big change from past decades, when socially responsible investing usually meant avoiding nuclear power producers, companies deemed to discriminate against minorities and weapons makers.

Executives of the financial institutions now jumping in say that socially responsible investing can also produce stronger returns, though some experts find the evidence at best inconclusive.

"There is a correlation between good practices and good investment results," said Philip Angelides, the state treasurer of California and a board member of Calpers, California's $165 billion public employees pension fund and the nation's largest investment fund of any kind. "People in the investment industry often want to put up a wall between the two things, but they are related."