Green Funds Still On Top

Socially responsible mutual funds that focus on green technology and sustainable practices are top performers this year-to-date.

SocialFunds.com -- While many of the technology companies that are a staple of social funds continue to experience a slump, dragging some funds into the red for the year, green technologies still carry the day. A look at the performance of social funds year-to-date, as of September 30, reveals the same trend in domestic equity funds, global funds, and balanced funds.

Among domestic equity funds, New Alternatives Fund is the clear top performer with a 74.00 percent gain for the year so far, more than double the next fund in line and putting it in the fourth percentile rank among its peers for the same period. New Alternatives, which invests specifically in industries oriented toward a clean environment, had a relatively lackluster performance until this year, bringing it's 5 year annualized return up to an admirable 17.07 percent.

"We invest in the environment because we think it's the right thing to do and because it also seems makes sense economically," said David Shoenwald, co-manager of New Alternatives, who founded the fund with his father in 1982. "Also, New Alternatives doesn't own the stocks most funds own, whether they're social funds or not, the Intels and Microsofts which are not doing as well as they did in past years."

Two other domestic equity funds are tied for second place in performance this year-to-date (9/30), Calvert Capital Accumulation Fund and Citizens Emerging Growth Fund, both of which have gained 23.66 percent. Calvert Capital Accumulation Fund, a moderately aggressive mid-cap fund, employs Calvert's comprehensive social screens and is managed by Brown Capital Management.

"This year, we have seen a movement toward a more diversified market and away from a speculative, technology driven market," said Tedd Alexander, Portfolio Manager and Analyst for Brown Capital Management. "Our investments away from technology in such areas as Healthcare and Financials have provided a large measure of the strong performance of Calvert Capital Accumulation Fund."

The highest performer among international social funds was Portfolio 21, the environmental sustainability fund introduced last year by the Portland, Oregon-based Progressive Investment Management. Portfolio 21 gained a 4.91 percent return year-to-date, the only positive return for the period among international or global social funds and a formidable success compared to their benchmark, the MSCI World Equity Index, which returned -7.25 percent over the same period.

"Portfolio 21's premise is that companies that incorporate environmental sustainability into their business strategies will have better than average prospects for long term success," said Leslie Christian, President of Progressive Investment Management. "This year, Portfolio 21 has benefited from its holdings in alternative energy, which are directly related to the environmental sustainability focus of the fund."

Topping off the ascendancy of green funds is the Green Century Balanced Fund, the highly proactive environmentally screened fund managed by the Boston-based Winslow Management Company for Green Century, a non-profit consortium of environmental groups. Green Century Balance Fund gained 43.46 percent year-to-date, more than five times any other social balanced fund, maintaining its first percentile ranking among its peer group for the same period.

"Green Century Balanced Fund invests in green, or environmentally pro-active, companies and clean, or environmentally responsible, companies, and avoids the 'dirties,'" said Jack Robinson, President of Winslow Management. "Our large commitment this year to renewable/alternative energy has been most rewarding and includes such holdings as Vestas Wind Power (Danish wind turbine manufacturer), AstroPower (solar cells), and Fuelcell Energy (fuel cells) to name three."

Finally, there are no strictly green products among fixed income funds, Parnassus California Tax-Exempt Fund is the top performer so far this year with 7.59 percent. Part of the Parnassus Income Trust, this fund for California residents only performed in the top second percentile among its peer group for the same period.

"In general, California bonds have done well because of scarcity," said Jerome Dodson, Parnassus President and portfolio manager for the fund. "Relatively few California municipalities are issuing bonds because they are flush with cash from increased tax revenue due to the booming economy. The Fund's top performance this year is due to low expenses, low turnover in the portfolio and selecting municipal bonds with strong social factors."

It is important to point out that the year is not over until it is over, and three quarters establish only a short-term trend in the scheme of things. Many of social funds that were top performers last year may surface again in the coming months, so far this year has shown that social funds investing in environmental solutions for tomorrow may reap their reward after all.



© 2008 SRI World Group, Inc. All Rights Reserved.