Money Buzz 1/04
Investing for a good cause, informal investments and more
More and more investors are jumping on the responsible-investing bandwagon, choosing mutual funds based on nonfinancial criteria, from those that shun tobacco, alcohol or weapons-related investments to those that factor in environmental concerns. Assets in funds using one or more of these strategies went from $40 billion in 1984 to $2.34 trillion in 2001, says the World Resources Institute, a Washington, DC, environmental research and policy group, which estimates more than 230 mutual funds incorporate socially responsible investment (SRI) strategies.
Despite the proliferation of SRI options, it's still a costly proposition, according to a recent study of SRI mutual funds by Wharton finance professor Christopher C. Geczy and graduate student David Levin. "Socially responsible investors can sacrifice as much as 31 basis points of performance per month, or 3.7 percent [per] year," says Geczy. "Over 30 years, that's a huge amount."