The continuing market slump during 2001 did not dim the performance ratings of socially and environmentally responsible mutual funds, according to new data released today by the nonprofit Social Investment Forum. Nearly two-thirds (63 percent) of all screened funds tracked by the Forum earned one of the two highest rankings for performance from either Lipper, Inc. or Morningstar or both. Despite the stock market downturn, the number of top marks from Lipper and Morningstar in 2001 was almost unchanged from 2000.
Of the smaller group of 16 screened funds tracked by the Social Investment Forum with $100 million or more in assets, four out of five (81 percent) received top performance marks for 2001 from one or both of the tracking firms.
Social Investment Forum spokesperson Steve Schueth, who also serves as president of the First Affirmative Financial Network, said: "Not even the continuing market deterioration during 2001 and the tragic events of September 11th could tarnish the enduring story of strong performance by socially and environmentally responsible mutual funds. The prediction that the performance of socially screened funds would plummet due to over-reliance on technology stocks is obviously wrong."
Alisa Gravitz, executive director of Co-op America, a non-profit investor education organization, commented: "In the wake of the terrible terrorist attacks, investors across the nation are taking the time to reassess their personal values and goals. We saw evidence in late 2001 suggesting that more and more investors want to make sure that their investments reflect their values. Another encouraging sign for socially responsible investing in 2002: Lipper data for the first 11 months of 2001 show that there was a 91 percent drop in dollars that investors put into all mutual funds, compared to a corresponding fall-off for socially responsible funds of only 36 percent. This loyalty is a testament to the strength of socially screened mutual funds."
David Berge, president of the Social Investment Forum, said: "The continued strong performance of screened mutual funds means that more and more Americans can now take the time to explore a wider range of social investment opportunities. We are already seeing more funds start to dedicate a portion of their assets to community investments focused on job creation, housing, daycare and other important social services. We are looking for more mutual funds to take up community investing in 2002 and also a growing number of investors to go beyond screened funds by moving their bank deposits into community development financial institutions."
HIGHLIGHTS OF NEW DATA ON SCREENED FUND PERFORMANCE
The Forum assessed the performance of socially responsible mutual funds through the end of 2001 by looking at comprehensive data from two sources: Lipper, Inc. and Morningstar. Major findings of the Forum’s analysis were as follows:
Nearly two thirds of the full universe of social funds earn highest ratings. Of the 46 socially screened funds with a three-year performance record tracked by the Social Investment Forum1, 29 — nearly two-thirds (63 percent) — received the highest marks from either Lipper or Morningstar. According to the Forum, 21 (or 72 percent) of the funds tracked received an "A" or "B" ranking from Lipper based on one- and/or three-year total returns within their investment categories. A total of 20 screened funds earned either four- or five-stars from Morningstar for at least three-year risk-adjusted performance. A number of the funds earned top rankings from both organizations. Both the Lipper and Morningstar analyses are based on time periods ending December 31, 2001.
81 percent of the largest socially responsible funds get top ratings. Of the socially screened funds with more than $100 million in assets2, 13 of 16 received top rankings from either or both Lipper and Morningstar. Nine earned an "A" or "B" ranking from Lipper, based on one- and/or three-year total returns in their investment categories. Eight received either four- or five-star ratings from Morningstar for three-year risk adjusted performance
Top-performing socially screened funds found in key asset classes. Based on data from Lipper and Morningstar socially and environmentally responsible mutual funds earned top ratings in most major sectors. Socially screened funds were represented in global, international, domestic equity, balanced and fixed-income categories.
Socially responsible index continues to outperform the S&P 500 on a total returns basis for 10 years. For the 10-year period ending December 31, 2001, total annualized returns for the Domini 400 Social Index (DSI 400) showed a gain of 13.77 percent, while the S&P 500 rose 12.95 percent over the same period. For 2001, the DSI 400 benchmark tracked closely to the S&P 500, coming in close to two-tenths of one percent lower for the 12-month period. The DSI 400 lost 12.07 percent during 2001, while the S&P 500 fell 11.88 percent during the same period.