5 Large Mutual Funds Who Invest Sustainably
The largest socially responsible mutual funds in terms of total assets under management are much smaller than the biggest traditional mutual funds, but they still provide some perspective on the growth and interest in the socially responsible investing (SRI) approach.
Use this list and the links to the fund families to learn more about how the major SRI funds screen for investment options. But remember, big doesn't necessarily mean better. Performance is what counts.
According to the firm, the fund invests in companies with market capitalization generally between $1 and $7.5 billion, with an emphasis on small-cap stocks.
Ariel’s flagship value approach is built on the basic principle of targeting undervalued companies that show a strong potential for growth. They attempt to take advantage of the market’s short-term thinking to optimize long-term results and seek differentiated companies with strong brands/franchises, strong cash flows, low debt, high-quality products or services, significant barriers to entry (moats), and low reinvestment requirements.
Stock symbol : ARGFX
The Pax World Balanced Fund is part of the Pax World Mutual Funds family based in Portsmouth, NH.
According to the firm, Pax World Balanced invests in companies “that provide goods and services, such as healthcare, technology, pollution control, housing, utilities, and education, that improve the quality of life.”
Pax World Balanced is a “domestic hybrid” fund, meaning it holds a mix of stocks and bonds of U.S. based companies.
The Fund seeks income and conservation of principal and, secondarily, long-term growth of capital by investing in a portfolio of stocks and bonds whose weightings vary depending on market conditions.
Stock symbol: PAXWX
The Parnassus Core Equity Fund invests with low turnover and high conviction in approximately 40 holdings and has in recent times become by far the largest US SRI Mutual Fund by asset size.
This is the largest public-facing mutual fund attempting to invest in a sustainable manner, as previously written about here.
The Core Equity Fund seeks to focus on identifying companies with:
- Wide moats or strong competitive advantages that protect market share and profitability
- Relevancy over the long term, which provides a compounding growth component
- Quality management teams that will act in the best interest of shareholders
- Favorable three-year investment horizon
The Fund strives to outperform the S&P 500 index on a risk-adjusted basis with a high active share. The Fund attempts to shield investors from losses during bear markets, while offering significant upside participation during bull markets.
Stock symbol: PRBLX
Ariel Appreciation invests in “mid-cap” stocks, which are companies with a market capitalization generally between $2 billion and $15 billion.
It uses the same screens as the larger Ariel Fund: environmental, tobacco, weapons, nuclear energy, and diversity.
Current largest holdings include Stanley Black and Decker, AFLAC, and JM Smucker.
Parnassus Fund is a member of the Parnassus Funds family based in San Francisco.
The Fund's contrarian approach seeks to invest in companies that are currently out of favor with the majority of investors. The Fund strives to outperform the S&P 500 index with a high active share. The Fund avoids companies engaged in the production, manufacturing, or refining of fossil fuels.
As of June 30, 2016, the top ten holdings of the fund were:
IBM Corp 4.9%
Ciena Corp 4.6%
Micron Technology 4.4%
Motorola Solutions 3.6%
Allergan plc 3.2%
Charles Schwab Corp 3.1%
Praxair Inc. 3.1%
CVS Health Corp 3.1%
Pentair plc 3.1%
Gilead Sciences Inc.3.0%
Stock symbol: PARNX