Socially Responsible or Fiscally Irresponsible?

By Justin Bolmgren

the impact today

According to the Report on US Sustainable, Responsible and Impact Investing Trends 2014, Socially Responsible Investing (SRI) has increased 76% in two years and now accounts for one-sixth of all professionally managed assets.   Recent numbers show there is now over $6.5 trillion in SRI strategies.  An amazing trend, but what is it?  Socially Responsible Investing as defined by The Forum for Sustainable and Responsible Investment is “an investment discipline that considers environmental, social and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive societal impact.”  Sounds great; an investment that contributes in some way to a “positive” society and I get a monetary return. So why not socially responsible?

In answering that question for myself, I stacked up one of the largest SRI mutual funds, Calvert Equity Portfolio A (CSIEX), with one the largest mutual funds in it’s category, American Funds Growth Fund of America (AGTHX).  After all, if contributing to a “positive” society meant low investment returns, why wouldn’t I just consider an outright donation…at least I get a tax deduction.  I felt compelled to compare what I might be, potentially, giving up in return to have a “positive” impact on society.  Below are the one and ten year returns for the two mutual funds I examined.

                                                                            1 Year (2/28/15)                      10 Year (2/28/15)

Calvert Equity Portfolio  A                                                 14.53%                                    8.24%

American Funds Growth Fund of America  A                     10.49%                                    8.54%

Morningstar Large Cap Growth Category                          11.91%                                    8.39%. 

a competitive response

In the early years of this strict discipline, SRI investments were seen as a sub-performing style.  Denying investment in such categories such as alcohol, tobacco, gambling, firearms, etc. restricted performance. However,  I see no evidence of poor performance out of one the largest SRI mutual funds.  So is the trend towards SRI a case of cart before horse, chicken before egg, etc?  Meaning, have people demanded SRI and, in turn, this has led to better products.  Or have better products drove enthusiasm for SRI?  In any case, the risk adjusted returns are certainly acceptable and still fulfill a personal need.  If you have a preference, I see no reason why not socially responsible.


Total return reflects performance without adjusting for sales charges or the effects of taxation, but is adjusted to reflect all actual ongoing fund expenses and assumes reinvestment of dividends and capital gains. If adjusted, sales charges would reduce the performance quoted. The performance quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate thus an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted herein. Before investing in a mutual fund, be sure to carefully consider the fund's objectives, risks, charges, and expenses. For a prospectus containing this and other important information, please contact the fund company Please read the prospectus carefully before investing