MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Tuesday, March 5, 2002 Dual Approach How does a socially responsible mutual fund firm work? Is it just interested in removing, say, tobacco securities from its holdings? In the case of Citizen Funds, the approach is a hybrid one. "We take a two-fold approach," John Shields, president and ceo of Citizens Advisors, told the MutualFundWire.com. "We take a look at both fundamentals and social screening. Typically, there is a Chinese wall between equity analysts and social researchers. We prefer to take a 360 degree view of a company before investing in it." "We start with companies that are good financial performers. Then once we have determined that a given company is a good performer, we go an look at it through our social screens," the executive continued. "A couple of our funds are sub-advised by other managers, for instance. After their portfolio manager checks on the fundamentals of a company, they bring it to us for the social screening. We do the fundamentals first because we are investment professionals, and our job is to ensure our clients get a return on their investment." But how do you sell social responsibility? Well, the firm has released a brochure for its value fund that states, "Value investing, long-term performance, social screens: the Citizens Value Fund has it all." Shields also contends that social screens help determine the long-term health of an investment. "Disasters like Enron have made everyone more attuned. How management behaves ultimately comes back to haunt a company. Social screening helps determine whether or not there is trouble on the horizon. How does management treat its employees? The community in which the company is located? Are their potential liability issues? How do they treat the environment? Social responsibility has a place in the portfolio, and it doesn't have to be the entire portfolio. But it does give the investor one more way of looking at a company beyond finical statements," he stated. Recently, The Christian Science Monitor ran a story on socially responsible mutual funds and the wake of the Enron crisis entitled "Enron's ex-role: model of ethics". Jeffrey Schappe, director of research at Citizens, stated in that article that Enron's financial statements were too "opaque" for him. "If I don't understand them, I throw in the towel," Schappe contended in that article. Printed from: MFWire.com/story.asp?s=1988 Copyright 2002, InvestmentWires, Inc. All Rights Reserved |