Socially Responsible Funds on a Tear
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Don't be too impressed -- great returns don't always mean much.
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Plus, the trouble with your mutual funds.
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Utilities mutual funds are on a tear, but investors shouldn't expect a repeat performance next year.
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By The News & Observer, Raleigh, N.C.  Dec. 9--What's muddying the waters at North Carolina's Clean Water Management Trust Fund? The state-funded conservation organization recently lost its executive director, and then its board chairman stepped down.
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Investing in funds that screen their investments by social criteria has always seemed a bit like recycling dryer lint into mittens: admirable, certainly, but possibly not worth the effort.You have to find funds that jibe with your social beliefs. Then, within that limited universe, you have to find one with decent performance. Now that funds have been strong-armed into revealing their votes in corporate elections, however, you might start thinking that investing in a social fund is worth the effort. At the very least, you might consider looking more closely at how your fund votes. Social investing starts with a simple premise: Companies with good records as corporate citizens should prosper. There is some evidence that this is true. The Domini 400 Social index, a stock index meant to be a socially screened version of the Standard &amp; Poor's 500-stock index, has gained an average 11.6% a year for the past decade, vs. 10.7% for the S&amp;P 500. The Domini index excludes companies associated with alcohol, tobacco, gambling and weapons. It seeks companies with good labor and environmental records. Other social funds use different screens, which may affect performance. The Timothy Plan funds, for example, avoid stocks of companies involved with abortion, pornography, anti-family entertainment, non-married lifestyles, alcohol, tobacco and gambling.Among others you can choose from:&#8226; MMA Praxis, which takes a Mennonite approach.&#8226; Amana funds, geared toward Islamic principles.&#8226; The Vice fund, which caters to hedonists.These are small funds, and, because they are actively managed, it's hard to tell whether their records stem from their screening process or their managers. The top-performing socially screened fund for the past decade: Ariel, a small-cap value fund that eschews handgun, alcohol and tobacco stocks.A bigger question: What difference does social investing make? Suppose, for example, you decide to buy 100 shares of Evil Corp. Unless you're buying its initial public offering, your money isn't going to Evil Corp. It's going to the person selling his 100 shares. On the other hand, if you buy Evil Corp. and its shares rise, you're probably rewarding Dr. Evil, the company's CEO. Why? Because Dr. Evil probably owns stock options in the company. This is probably the most powerful argument for owning a socially screened fund: They can be a force for changing corporate behavior. Proxy votes are their best weapon. Companies hold annual elections, and in most cases, one share of stock buys you one vote in a company's corporate elections. A large fund can have a big impact on corporate elections. Until recently, you could only see how your fund voted its proxy if it told you. And most times, it didn't. But the Securities and Exchange Commission now requires funds to report their proxy votes, and those reports are starting to roll in. They're particularly revealing because they reflect a period when most funds probably didn't anticipate that their votes would be examined. Early indications are that funds mainly vote with company management. For example, Fidelity Magellan participated in 2,266 proxy votes last year. Of those, company management recommended that shareholders vote for 1,935 proposals. Magellan voted with management all but 48 times and cast no vote 68 times. Typically, the fund dissented on matters that might weaken earnings, voting against big executive options packages, for example. Socially screened funds tend to take activist roles in proxy votes, using their shares to influence company policy. The Calvert funds, for example, filed 10 shareholder resolutions calling for greater diversity on company boards. They withdrew five immediately because the companies agreed, says Joe Keefe, Calvert's senior manager on social policy. The sunshine of disclosure may prompt more funds to become active in pushing for corporate reforms. If you want to see how your fund has voted the past 12 months through June, go to www.sec.gov and search for your fund's NPX form.Corporate votes also touch on areas that may be important to you: environmental concerns, for example, or social issues, such as fair treatment of retirees. If so, then a social fund might be your best bet. Five of the best large-cap funds are in the chart. John Waggoner is a personal finance columnist for USA TODAY. On Thursdays, he answers your questions in his Net Gains column, only at USATODAY.com. His Investing column appears Fridays. Click here for an index of Investing columns. His e-mail is jwaggoner@usatoday.com
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It's time to stop a hidden fund fee.
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Stop treating your cash like trash.  With yields on money market mutual funds pushing 5 percent,  it's time to stop ignoring the returns you're getting on the  money you have saved for a rainy day.
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Individual investors are struggling to find a balanced approach at an unreliable time for the market.
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Just when you thought you had a handle on exchange-traded funds ...
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Some exchange-traded funds aren't for anyone.
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We finally get to know some of the deep, dark secrets of the mutual fund business: Are funds really protecting shareholder rights or just rubber-stamping the agendas of corporate leaders?
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Do the right thing -- for humanity and your heirs' wallets.
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What increased fund transparency means for investors.
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With a disappointing third quarter behind them, mutual funds are hoping for a better performance in the last three months of the year. Technology and growth funds, which suffered the most during the summer, are in a good position for a comeback &#151; if the economy shows signs of strength.
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For either good or bad, these funds stand out from the rest of the pack.
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There is little cause for celebration in the stock market these days, but investors in value-focused mutual funds have reason to feel a bit smug -- if only because they've lost less than the folks who stuck with growth.
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Just when I thought it might be winding down, the mutual fund scandal is back to rear its ugly head. Yesterday, Franklin Resources (NYSE: BEN), parent of the Franklin Templeton