For most of us it’s hard, perhaps painful - okay it really, really hurts – to look at your investment portfolio these days. October’s plunge only made a miserable 2008 worse. But what if you’re a socially responsible investor still looking to put money into the market? You might be someone whose job is secure, your debt under control and your plans for retirement still on track. Is there a socially responsible fund out there worthy of your money?
Don’t let October or even this past year be your only measure. Let’s all agree that 2008 will be one of those historic anomalies - if for no other reason than we’d hate to go through it again next year. If you look at three- and five-year annualized percentage returns, you can get a better idea of funds that have performed relatively well.
According to Morningstar, the Parnassus Fixed-Income Fund had the best annualized return over three years at 3.63 percent, as of October 31. Parnassus Fixed-Income is a no-load intermediate corporate bond fund with more than $95 million in assets under management. It requires a minimum investment of $2,000 and its expense ratio is 0.88 percent, which is below Morningstar’s average expense ratio of 1.18 percent for all socially responsible funds in its database and 1.26 percent for non-socially responsible funds. The fund managers screen out companies that manufacture alcohol or tobacco products, are involved with gambling, produce weapons or generate electricity from nuclear power.
Parnassus Fixed-Income is followed by the Amana Income Fund, with a three-year average annual return of 3.59 percent. Amana is a morally responsible mutual fund that invests according to Islamic principles, which includes forgoing usury or interest. The managers do not invest in bonds, but instead find companies that have a record of maintaining and increasing their dividends. Amana Income is a no-load fund with a $250 minimum and an annual expense ratio of 1.33 percent. It has more than $506 million in assets under management.
The Amana Income Fund also recorded a five-year average annual growth rate of 10.14 percent, tops in Morningstar’s SRI universe. Behind it was the Amana Growth Fund, with an 8.02 percent average five-year growth rate. Like the Amana Income Fund, Amana Growth is a no-load fund with a $250 minimum investment required. It’s expense ratio is 1.31 percent.
Outside of the Parnassus and Amana fund families, the Domini Social Bond Fund posted a 3.16 percent three-year average annual return through October. The fund normally invests about 85 percent of its assets in intermediate fixed-income securities, but also about 10 percent of its assets in community development debt. Domini Social Bond is a no-load fund, with a 0.95 percent expense ratio and a $2,500 minimum investment. It screens for companies that gain much of their revenues from tobacco products, alcohol, gambling, nuclear power producers and military weapons manufacturers.