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Author: Carpian Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2465  
Subject: Re: Great piece on guns/investment Date: 1/12/2013 11:58 AM
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It is like voting. One vote does not matter so should we stop voting?

I've gone out of my way in my posts to state that is not the point I am trying to make. I firmly believe in SRI (according to each individual's values, of course) and have been doing it every day of my 25 years of investing.

Recently some funds decided to divest from some gun firms. Stock price did fall.

Totally agree there is a negative effect on stock price during divestment, as there is any time a major holder sells out of any stock for any reason. But does that effect last after the divestment is over?

There are other ways of reducing the number of potential buyers of a stock besides social concerns. Take market cap, for example. Many funds and institutions cannot buy stocks below a certain market cap, so that greatly reduces the number of potential buyers of small and micro cap stocks. Does that mean that small and micro cap stocks trade for dirt cheap? I don't think so--it just means they trade low share volumes.

I'm in agreement that picking the right "socially responsible stocks" will lead to superior returns over the long haul. But there are plenty of dogs in that pool also, so you have to pick the right ones, which Alyce has been very good at doing.

This seems to be borne out by data. Over the past 10 years ended 12/31/12, the S&P 500 has returned an average of 7.1% per year. How have, say, the top 10 SRI large cap domestic equity funds (by amount of assets as stated at socialfunds.com) that have 10-year histories done during that time?

Gross returns (before the companies deduct expenses)(sorry for the lack of formatting):

Parnassus Equity Income 9.0%
CSIF Equity Portfolio A 6.4%
Neuberger Berman 8.6%
Domini Social Equity 7.0%
Vanguard FTSE Social Index 5.7%
New Covenant Growth 7.4%
Dreyfous Premier Third Century 7.3%
Sentinel Sustainable Core Opportunity 8.3%
Pax World Growth 9.3%
Walden Social Equity 7.6%


Most are beating the S & P with their gross returns, although not by huge amounts and they may fall below when you deduct expenses.

By the way, one I found in making that list that I hadn't been aware of but some people may want to peruse their list of holdings, is the Parnassus Workplace fund, which seeks companies "with outstanding workplaces". It has been performing quite well, though it doesn't have a 10-year history.

http://www.parnassus.com/parnassus-mutual-funds/workplace/
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