I spent the morning in bed researching mutual funds. It’s my birthday, so I can do whatever I want. I happen to enjoy numbers and spreadsheets.
I used my new favorite website, Morningstar, to do the research. I collected performance data, Morningstar rating, expense information, and noted questionable holdings.
Here’s what I learned. All the funds I looked at performed within a couple of percentage points over the last 10 years (between 4.03% and 6.52%). Socially responsible funds seemed to do just as well, if not better, than the “normal” funds. And, here’s the sad part, they all included questionable holdings.
Because, when you get down to it, the stock market is full of Big Business. Here are a few of the businesses I found in the socially responsible funds:
- Gilead Sciences (charging ridiculous amounts of money for medication)
- Pfizer (maker of Xanax and Zoloft)
- Bank of America (Big Bad Bank)
- PepsiCo (food giant)
- McDonald’s (okay, they recently raised wages, but why did it take so long?)
- Lowe’s (read this open letter by my husband to Lowe’s CEO)
The best fund I’ve seen so far, provided to me by my financial adviser a while back, is one called Neuberger Berman Socially Responsible Fund Institutional (NBSLX). Part of it may be that I don’t know what most of the companies on their list do, but I like that it’s not more of the same. I’ll need to look into it some more.
Here’s my conclusion: socially responsible investing and the stock market are not very compatible. At least when you think about social responsibility outside of Big Oil, Big Tobacco, Big Gambling, and Big Defense. If I want to stick with the stock market, I’ll have to devise some additional criteria to figure out where to go. Ease of maintenance may be one. Low expense ratio will probably be another.
On Tuesday, I’ll meet with my adviser and see where to go from here. I’m still very unsure how to tackle this…