Comments on: Low-Cost, Socially Responsible Mutual Funds

By: Paul Williams @ Provident Planning

Paul Williams @ Provident Planning — Sat, 15 Aug 2009 14:34:23 +0000

Mike, I wrote an article about the problems with socially responsible or faith-based investing as I see them over at Provident Planning. I'd be interested in your thoughts. Here's the link: http://www.providentplan.com/298/faith-based-or-socially-responsible-investing-delusions-of-righteousness/

By: Mike

Mike — Thu, 30 Jul 2009 10:57:57 +0000

“That said, the turnover ratio of the Domini fund must be 31%, not 0.31%.”

Oops! A typo indeed. Thanks for pointing that out. The post has been updated.

By: TFB

TFB — Thu, 30 Jul 2009 07:06:38 +0000

I also subscribe to the school of thought that buying shares in a company does not really help the company itself. If only socially irresponsible shareholders own the company, the company may become even more socially irresponsible. Therefore I have not paid any attention to the SRI offerings. That said, the turnover ratio of the Domini fund must be 31%, not 0.31%.

By: Mike

Mike — Wed, 29 Jul 2009 21:13:30 +0000

Paul: I think you just conveyed my thoughts on the matter better than I ever have.

By: Paul Williams @ Provident Planning

Paul Williams @ Provident Planning — Wed, 29 Jul 2009 16:24:16 +0000

Mike and Dylan,

I agree with your thoughts here. Far too much emphasis is put on socially responsible (or conscious) investing, especially in religious circles. People think they’re going to make a difference by investing this way. Sure it shows what you support and don’t support, but it has very little real impact on the world.

If you want to see real changes or have a real influence, then donate your money or your time instead. By actually doing the good things you’d like to see in the world, you’ll make real changes – not just changes in your portfolio that make you feel better about yourself…

By: Mike

Mike — Wed, 29 Jul 2009 15:09:27 +0000

Leah: Thanks for stopping by to contribute your thoughts. I took a look at NBSRX. One other noteworthy difference is that it appears to have a significant portion of its assets invested internationally (19.7% at the moment).

Dylan: My thoughts are similar. For me, I’m perfectly comfortable with any moral implications involved in owning index funds that (together) represent the entire world economy (or as close as I can manage).

That said, I understand that other people are not. In which case I figure that we might as well do our best to help those investors invest successfully within the constraints that they’ve set.

By: Dylan

Dylan — Wed, 29 Jul 2009 14:45:26 +0000

First, I can’t stand the term “socially responsible investing.” When push comes to shove, many don’t agree on what’s responsible and what’s not. And if you disagree with some or all of someone else’s perspective, are you “socially irresponsible?”

I much prefer “socially conscious investing.” I implies some thought went into the social impacts of investment choices with out claiming to be responsible versus someone else’s choices.

Also, I’ve yet to find a fund that accurately reflects my social conscience. They all seem to want to put you in a neatly labeled box with thousands of other “like” minds.

Personally, I think buying the whole market with low-cost index funds is socially conscious investing for me. I can take some of the money I save in fees and use it to support the specific causes I care most about.

By: Leah

Leah — Wed, 29 Jul 2009 14:41:23 +0000

A socially responsible fund that I really like and have recommended to clients is Neuberger Berman Socially Responsible Fund (NBSRX). It is also a socially responsible large growth fund, with an acceptable expense ratio (.89%). The major difference is that it has a 4 star Morningstar rating, as compared to Vanguard’s 1 star.