Socially Responsible (Progressive) Fund Options

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wondergrape
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Socially Responsible (Progressive) Fund Options

Post by wondergrape » Mon Apr 28, 2014 4:21 pm

This thread dovetails with another thread I recently started, wherein I was advised to max out my Roth IRA. I found this to be prudent advice, and realized I should probably start one for my wife as well. Here's the rub. She only wants to do it if she can invest in progressive industries. I know that Vanguard offers a "social responsibility fund", but that includes pharmaceutical and energy companies which make it a non-starter.

The pragmatist in me wants to set it up with a no-load company in order to minimize both transaction and management fees.

What are her (our) options?

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Re: Socially Responsible (Progressive) Fund Options

Post by surfstar » Mon Apr 28, 2014 4:29 pm

Invest in the total market, maximize returns and minimize expenses, then use some of the funds earned/saved to donate to applicable charities.

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Re: Socially Responsible (Progressive) Fund Options

Post by wondergrape » Mon Apr 28, 2014 4:34 pm

You sound like me. Her argument would be that doesn't offset her investment to industries she disapproves of. It's really not negotiable, so further critiques of her stance are unnecessary. Solutions are welcome.

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Re: Socially Responsible (Progressive) Fund Options

Post by John3754 » Mon Apr 28, 2014 4:35 pm

This comes up from time to time and it seems that a big part of the problem is that everyone's definition of "socially responsible" differs. It may be impossible to find a fund in which EVERY company fits your personal definition, in which case your only option would be to research and purchase individual stocks in companies that you feel meet your definition. This will require a great deal of work, you will have to research each company and make sure that you find a large enough number of stocks across a large enough number of industry sectors as to have a reasonable amount of diversification. You will also have to be willing to accept the fact that your portfolio may underperform the market, and it may underperform the market a lot. You may even have to ask yourself if you're willing to risk your retirement in order to maintain these ideals.

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Re: Socially Responsible (Progressive) Fund Options

Post by bottlecap » Mon Apr 28, 2014 4:42 pm

Convince her to invest in normal companies and give 1% of the amount she has invested to her favorite "progressive" charities every year. She will make out better and actually support her causes, rather than merely think she's supporting her causes (she won't be) while losing money.

Thankfully, for me and my causes, she probably won't heed this advice!

JT

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Re: Socially Responsible (Progressive) Fund Options

Post by Raybo » Mon Apr 28, 2014 4:46 pm

You are asking for contradictory goals.

A managed fund will cost more than an index fund. The more work the manager has to do, the more expensive. So, you (your wife) will have to compromise on the low-cost goal.

As for acceptable companies, why not set up your allocation so that 100% of her money is in the bond part of your allocation? That way, the actual companies involved won't matter. Maybe buy IBonds?
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Re: Socially Responsible (Progressive) Fund Options

Post by cheese_breath » Mon Apr 28, 2014 4:52 pm

Can you give some examples of what she considers to be "progressive industries"?
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Re: Socially Responsible (Progressive) Fund Options

Post by Mountain Man » Mon Apr 28, 2014 4:58 pm

How about investing in bonds? Does she have any objection to that? Could get a mix of high yield bonds and/or treasuries. Any objections to investing in commodities or a managed futures fund?

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Re: Socially Responsible (Progressive) Fund Options

Post by HurdyGurdy » Mon Apr 28, 2014 5:04 pm

This site has an interesting SRI portfolio:

http://investingformeaning.com/wordpres ... portfolio/

There are many relevant discussions in the bogleheads forum.

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Re: Socially Responsible (Progressive) Fund Options

Post by wondergrape » Mon Apr 28, 2014 5:13 pm

Bonds! You guys are geniuses! Seriously, how did that not occur to me?!?

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Re: Socially Responsible (Progressive) Fund Options

Post by cheese_breath » Mon Apr 28, 2014 5:14 pm

wondergrape wrote:Bonds! You guys are geniuses! Seriously, how did that not occur to me?!?
But does she only want bonds from progressive companies?
The surest way to know the future is when it becomes the past.

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Re: Socially Responsible (Progressive) Fund Options

Post by wondergrape » Mon Apr 28, 2014 5:27 pm

She would want government bonds. Can anyone recommend a fund, preferably through Vanguard?

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Re: Socially Responsible (Progressive) Fund Options

Post by kerplunk » Mon Apr 28, 2014 5:27 pm

surfstar wrote:Invest in the total market, maximize returns and minimize expenses, then use some of the funds earned/saved to donate to applicable charities.
This is exactly what I was going to recommend.

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Re: Socially Responsible (Progressive) Fund Options

Post by wondergrape » Mon Apr 28, 2014 5:31 pm

kerplunk wrote:
surfstar wrote:Invest in the total market, maximize returns and minimize expenses, then use some of the funds earned/saved to donate to applicable charities.
This is exactly what I was going to recommend.

"Tokenism" is the word she used when I floated this idea.

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Re: Socially Responsible (Progressive) Fund Options

Post by Mountain Man » Mon Apr 28, 2014 5:43 pm

wondergrape wrote:She would want government bonds. Can anyone recommend a fund, preferably through Vanguard?

VUTSX and VFITX. Long term and intermediate term Treasuries.

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Re: Socially Responsible (Progressive) Fund Options

Post by HurdyGurdy » Mon Apr 28, 2014 5:45 pm

For bonds,
https://investor.vanguard.com/mutual-fu ... class=bond

I wonder if municipal bonds are the least objectionable.

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Re: Socially Responsible (Progressive) Fund Options

Post by wondergrape » Mon Apr 28, 2014 5:49 pm

Mountain Man wrote:
wondergrape wrote:She would want government bonds. Can anyone recommend a fund, preferably through Vanguard?

VUTSX and VFITX. Long term and intermediate term Treasuries.

Perfect, thanks.

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Re: Socially Responsible (Progressive) Fund Options

Post by HurdyGurdy » Mon Apr 28, 2014 5:54 pm

Peer-to-peer lending may be another way, (http://www.prosper.com/, https://www.lendingclub.com/) but the landscape has changed recently. (search for a recent post by renojay on it).

It should not be a large part of your portfolio anyway.

Another slice to consider are REITs.

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Re: Socially Responsible (Progressive) Fund Options

Post by Duckie » Mon Apr 28, 2014 6:22 pm

wondergrape wrote:She would want government bonds. Can anyone recommend a fund, preferably through Vanguard?
Four taxable government bond fund options suitable for a Roth IRA are:
  1. (VFIIX) Vanguard GNMA Fund Investor Shares (0.21%)
  2. (VFITX) Vanguard Intermediate-Term Treasury Fund Investor Shares (0.20%)
  3. (VSGBX) Vanguard Short-Term Federal Fund Investor Shares (0.20%)
  4. (VTIPX) Vanguard Short-Term Inflation-Protected Securities Index Fund Investor Shares (0.20%)
I'd be inclined to pick #2 and/or #4.

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Re: Socially Responsible (Progressive) Fund Options

Post by John3754 » Mon Apr 28, 2014 6:27 pm

wondergrape wrote:She would want government bonds.
Are US government bonds used to fund only activities that you'd consider socially responsible? This is a serious question.

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Re: Socially Responsible (Progressive) Fund Options

Post by stoub » Mon Apr 28, 2014 6:29 pm

For stock funds, here are some other no-load socially-responsible index mutual funds in addition to Vanguard: It isn't likely that someone with strict requirements will be entirely satisfied with either of these if they weren't satisfied with the Vanguard fund, but they may be slightly more appealing.

Another stock option, if the Treasury bond fund doesn't work out (funds debt to support the military-industrial complex, etc.), is to pick an index fund in a sector that is acceptable. See this article for ideas, largely in environmental sectors.

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Re: Socially Responsible (Progressive) Fund Options

Post by HurdyGurdy » Mon Apr 28, 2014 6:36 pm

http://en.wikipedia.org/wiki/Socially_r ... _investing has a nice chart of funds by issues.

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Re: Socially Responsible (Progressive) Fund Options

Post by kerplunk » Mon Apr 28, 2014 6:38 pm

John3754 wrote:
wondergrape wrote:She would want government bonds.
Are US government bonds used to fund only activities that you'd consider socially responsible? This is a serious question.
This is exactly my point. Everything in life can be debated as to whether it is socially responsible or not. This is why I stated that we do not know where his or his wife's social responsibility line begins or ends so there is no way we can help him other than continue to list suggestions which will inevitably be declined.

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Re: Socially Responsible (Progressive) Fund Options

Post by berntson » Mon Apr 28, 2014 6:48 pm

wondergrape,

I like the idea of buying individual ethical companies from the S&P 500. For every $500 you put in your wife's IRA, pick a new company to buy. You'll have 50 companies after five years of investing. You can use new money to rebalance. The fees would be reasonably low in the long run. And you could be proud of the companies you own.

The key is to not buy or sell companies based on how you think they will perform. You have to ignore "exciting new products" or predictions that a company is "going down the tubes." Once you have a company, you need to keep it (as long as its practices are acceptable). If you screen companies only based on their ethical practices, you should have a decent shot at getting more or less a random sample of the S&P. You might underperform a bit, but no one ever said that making ethical choices was free.

The project of doing research on company ethics could also be enjoyable, something you and your wife could do together.

Interactive Brokers has tools for managing baskets of individual stocks. For instance, if you have 50 companies in a basket, you can place an orders to rebalance all 50 of them in one shot. They also have low trading fees ($1 per trade). You could also start with 50 companies right away, since they buy fractional shares.

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Re: Socially Responsible (Progressive) Fund Options

Post by HurdyGurdy » Mon Apr 28, 2014 7:05 pm

In the same line of berntson, you could explore indexes that better fit your requirements (Domini, Calvert, FTSE4Good) (http://www.bogleheads.org/wiki/Social_r ... ty_indices), and get a list of their holdings, or get the holdings of an actively managed fund (like http://www.everence.com/m6.aspx?id=2572&token=1). And then buy (or not) those individual stocks.

Of course it would be much riskier, due to lack of diversification and the temptation to time the market. And time consuming.
Last edited by HurdyGurdy on Mon Apr 28, 2014 7:26 pm, edited 1 time in total.

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Re: Socially Responsible (Progressive) Fund Options

Post by wondergrape » Mon Apr 28, 2014 7:14 pm

Lots of great ideas here. Keep them coming.

To kerplunk et al.: I can't read my wife's mind either. I'm not sure she know what she wants, other than progressive, socially responsible options. Interpret that as you will. Others on this thread have done an excellent job, and all of the recommendations here are helpful. The judgements are not. If you don't feel like you have enough information, stop posting.

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Re: Socially Responsible (Progressive) Fund Options

Post by CyberBob » Mon Apr 28, 2014 7:24 pm

berntson wrote:wondergrape,

I like the idea of buying individual ethical companies from the S&P 500. For every $500 you put in your wife's IRA, pick a new company to buy. You'll have 50 companies after five years of investing. You can use new money to rebalance. The fees would be reasonably low in the long run. And you could be proud of the companies you own.

The key is to not buy or sell companies based on how you think they will perform. You have to ignore "exciting new products" or predictions that a company is "going down the tubes." Once you have a company, you need to keep it (as long as its practices are acceptable). If you screen companies only based on their ethical practices, you should have a decent shot at getting more or less a random sample of the S&P. You might underperform a bit, but no one ever said that making ethical choices was free.

The project of doing research on company ethics could also be enjoyable, something you and your wife could do together.

Interactive Brokers has tools for managing baskets of individual stocks. For instance, if you have 50 companies in a basket, you can place an orders to rebalance all 50 of them in one shot. They also have low trading fees ($1 per trade). You could also start with 50 companies right away, since they buy fractional shares.
To add to berntson's ideas, you might also consider Motif Investing, which allows you to trade a basket of up to 30 stocks for just one $9.95 commission.
https://www.motifinvesting.com

Bob

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Re: Socially Responsible (Progressive) Fund Options

Post by leonard » Mon Apr 28, 2014 7:37 pm

Does your wife realize that money invested in funds generally do not go to the "bad" companies - unless it's an IPO. The dollars are simply going to other investors. You are not actually providing the "bad" companies with any money.

Let's take it another step - let's say you buy the shares in "good" companies. As stated above, that money is going to another investor that is selling most of the time - not the company. You have no idea what that investor will use "your" invested money for - buy gas for an SUV, finance a smoking habit, invest the money in a different "bad" company - all sorts of things that you may not find socially responsible.

The reality is - investing socially responsibly doesn't impact the cash flow of socially responsible companies. You are not in any way "supporting" them - other than symbolically.
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

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Re: Socially Responsible (Progressive) Fund Options

Post by wondergrape » Mon Apr 28, 2014 7:59 pm

leonard wrote:Does your wife realize that money invested in funds generally do not go to the "bad" companies - unless it's an IPO. The dollars are simply going to other investors. You are not actually providing the "bad" companies with any money.

Let's take it another step - let's say you buy the shares in "good" companies. As stated above, that money is going to another investor that is selling most of the time - not the company. You have no idea what that investor will use "your" invested money for - buy gas for an SUV, finance a smoking habit, invest the money in a different "bad" company - all sorts of things that you may not find socially responsible.

The reality is - investing socially responsibly doesn't impact the cash flow of socially responsible companies. You are not in any way "supporting" them - other than symbolically.
A good point. I believe we've abandoned funds at this point and will likely pursue either bonds or individual stocks.

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Re: Socially Responsible (Progressive) Fund Options

Post by bottlecap » Mon Apr 28, 2014 8:02 pm

I don't see how bonds gets around the issue - lending companies money benefits them far more than buying their stock. Buying government bonds subisidizes all sorts of "bad" companies, but largely funds killing people.

I don't think this is a silly issue, but it's complicated. I still think the only way to make an impact is invest for return and give your money to the causes you find palatable.

JT

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Re: Socially Responsible (Progressive) Fund Options

Post by leonard » Mon Apr 28, 2014 8:04 pm

wondergrape wrote:
leonard wrote:Does your wife realize that money invested in funds generally do not go to the "bad" companies - unless it's an IPO. The dollars are simply going to other investors. You are not actually providing the "bad" companies with any money.

Let's take it another step - let's say you buy the shares in "good" companies. As stated above, that money is going to another investor that is selling most of the time - not the company. You have no idea what that investor will use "your" invested money for - buy gas for an SUV, finance a smoking habit, invest the money in a different "bad" company - all sorts of things that you may not find socially responsible.

The reality is - investing socially responsibly doesn't impact the cash flow of socially responsible companies. You are not in any way "supporting" them - other than symbolically.
A good point. I believe we've abandoned funds at this point and will likely pursue either bonds or individual stocks.
Exact same problems with Individual Stocks and Bonds. If they are not IPO or newly issued - you are simply helping giving money to a seller which may undertake something "good" or "bad" with the money you gave them for the shares.

Plus, buying individual stocks it is very difficult to get good diversification, unless you have a large portfolio and create a semi-index fund out of it.
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

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Re: Socially Responsible (Progressive) Fund Options

Post by bhsince87 » Mon Apr 28, 2014 8:15 pm

One could equally ask for Socially Responsible (Conservative) fund options.

Or Socially Responsible (Libertarian) fund options.

They might exist.

But there is nothing Bogelish about them. As others have mentioned, financially it's probably better to invest in a general fund and then use your profits as you deem "appropriate".
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Re: Socially Responsible (Progressive) Fund Options

Post by LadyGeek » Mon Apr 28, 2014 8:26 pm

I removed some off-topic comments and their responses; some continuity is lost. As a reminder, see: Forum Policy
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones...

Attacks on individuals, insults, name calling, trolling, baiting or other attempts to sow dissension are not acceptable.
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Re: Socially Responsible (Progressive) Fund Options

Post by LadyGeek » Mon Apr 28, 2014 8:28 pm

The wiki has some helpful background information: Social responsibility indices
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Re: Socially Responsible (Progressive) Fund Options

Post by bertilak » Mon Apr 28, 2014 8:57 pm

If your wife is looking to have a socially responsible, progressive effect, buying stock in socially responsible companies will not do the job -- for all the reasons given above.

As a matter of fact it is quite the opposite; buying stock in companies she feels are offensive will give her a chance to vote for the companies' boards of directors and vote on policy issues. This will give her at least a minimal impact, something none of the above proposals will do.
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Re: Socially Responsible (Progressive) Fund Options

Post by House Blend » Mon Apr 28, 2014 9:01 pm

I think individual stocks or bonds is making things way too complicated.

Consider IRA certificates at a local credit union that is NCUA insured.

Might do a good job of passing her social responsibility test, and they can offer better returns than treasury bonds (and are equally safe).

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Re: Socially Responsible (Progressive) Fund Options

Post by leonard » Mon Apr 28, 2014 9:23 pm

House Blend wrote:I think individual stocks or bonds is making things way too complicated.

Consider IRA certificates at a local credit union that is NCUA insured.

Might do a good job of passing her social responsibility test, and they can offer better returns than treasury bonds (and are equally safe).
Who knows who that Credit Union loans to?
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

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Re: Socially Responsible (Progressive) Fund Options

Post by Ged » Mon Apr 28, 2014 9:41 pm

SRI is an activity, the real question if you are going to try something like this is how effective are the different ways of engaging in it. I think buying bonds is a simple null gesture, having no effect. You might as well equally buy a total market fund. By doing so you are opting out on the chance to positively influence things.

I think that you probably want to do some reading first. For example this link refers to a book excerpt that hits on many of the issues here and what can be done to effectively invest in a socially responsible way.

http://admin.csrwire.com/system/book_ex ... k_info.pdf

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Re: Socially Responsible (Progressive) Fund Options

Post by MN Finance » Mon Apr 28, 2014 9:42 pm

First, we all know (generally) that investing in the broad market, then giving to local charitable causes is a far better use of your resources than social screening. But this isn't about convincing the OP. The social screen is given, so he's asking how to best execute. I asked a similar question (not for me personally), made it very clear I didn't need feedback on the screening idea, but still had posters who decided their insight was SO valuable they couldn't help sharing it.

Second, given the narrow scope you're interested in, as said it will be very hard to identify the appropriately screened fund. TIAA has a decent retail stock fund and bond fund. Vanguard has one that's okay. DFA in particular has very good social core options.

I agree that the best option is to fill her portion of the portfolio with acceptable non screened investments like bonds, REITs, and possibly small caps. There are just about no screened small cap funds, so this could be a candidate. Pretty hard for anyone to evaluate the social impact of small companies.

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Re: Socially Responsible (Progressive) Fund Options

Post by Dave55 » Mon Apr 28, 2014 9:54 pm

Buy multifamily REITS, AVB Avalon Bay, EQR Equity Residential, UDR, CPT, and ESS etc.

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Re: Socially Responsible (Progressive) Fund Options

Post by berntson » Mon Apr 28, 2014 10:34 pm

leonard wrote:Does your wife realize that money invested in funds generally do not go to the "bad" companies - unless it's an IPO. The dollars are simply going to other investors. You are not actually providing the "bad" companies with any money.

Let's take it another step - let's say you buy the shares in "good" companies. As stated above, that money is going to another investor that is selling most of the time - not the company. You have no idea what that investor will use "your" invested money for - buy gas for an SUV, finance a smoking habit, invest the money in a different "bad" company - all sorts of things that you may not find socially responsible.

The reality is - investing socially responsibly doesn't impact the cash flow of socially responsible companies. You are not in any way "supporting" them - other than symbolically.
No. High share prices directly benefit companies. Take Evil Corp for example. Shares are a kind of corporate currency. Evil Corp can use its treasury shares to purchase other companies or to pay executives. The higher its stock value, the more it can buy (Facebook has been using its shares recently to buy companies for absurd amounts. It couldn't do that if its share price wasn't so high.) If Evil Corp falls on hard times, it can issue new shares to raise money. I believe that one of the major banks avoided bankruptcy by doing this. Or it can issue new shares for more ordinary acquisitions and expansions.

Basically, the share price for a company helps to determine its cost of capital. The higher the price, the lower the cost of capital. The lower the cost of capital, the easier it is for Evil Corp to raise money and expand operations. If you hate Evil Corp, you probably don't want to help it expand operations.

Investors can also rightfully be disturbed by the idea of profiting from corporations they oppose. Suppose Evil Corp is literally dumping poison into the only fresh water supplies of a poor village. If you oppose the dumping because it will kill people in the village, you probably don't want to profit from the dumping either.
Last edited by berntson on Mon Apr 28, 2014 10:38 pm, edited 1 time in total.

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Re: Socially Responsible (Progressive) Fund Options

Post by leonard » Mon Apr 28, 2014 10:35 pm

MN Finance wrote:First, we all know (generally) that investing in the broad market, then giving to local charitable causes is a far better use of your resources than social screening. But this isn't about convincing the OP. The social screen is given, so he's asking how to best execute. I asked a similar question (not for me personally), made it very clear I didn't need feedback on the screening idea, but still had posters who decided their insight was SO valuable they couldn't help sharing it.

Second, given the narrow scope you're interested in, as said it will be very hard to identify the appropriately screened fund. TIAA has a decent retail stock fund and bond fund. Vanguard has one that's okay. DFA in particular has very good social core options.

I agree that the best option is to fill her portion of the portfolio with acceptable non screened investments like bonds, REITs, and possibly small caps. There are just about no screened small cap funds, so this could be a candidate. Pretty hard for anyone to evaluate the social impact of small companies.
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Re: Socially Responsible (Progressive) Fund Options

Post by leonard » Mon Apr 28, 2014 10:42 pm

berntson wrote:
leonard wrote:Does your wife realize that money invested in funds generally do not go to the "bad" companies - unless it's an IPO. The dollars are simply going to other investors. You are not actually providing the "bad" companies with any money.

Let's take it another step - let's say you buy the shares in "good" companies. As stated above, that money is going to another investor that is selling most of the time - not the company. You have no idea what that investor will use "your" invested money for - buy gas for an SUV, finance a smoking habit, invest the money in a different "bad" company - all sorts of things that you may not find socially responsible.

The reality is - investing socially responsibly doesn't impact the cash flow of socially responsible companies. You are not in any way "supporting" them - other than symbolically.
No. High share prices directly benefit companies. Take Evil Corp for example. Shares are a kind of corporate currency. Evil Corp can use its treasury shares to purchase other companies or to pay executives. The higher its stock value, the more it can buy (Facebook has been using its shares recently to buy companies for absurd amounts. It couldn't do that if its share price wasn't so high.) If Evil Corp falls on hard times, it can issue new shares to raise money. I believe that one of the major banks avoided bankruptcy by doing this. Or it can issue new shares for more ordinary acquisitions and expansions.

Basically, the share price for a company helps to determine its cost of capital. The higher the price, the lower the cost of capital. The lower the cost of capital, the easier it is for Evil Corp to raise money and expand operations. If you hate Evil Corp, you probably don't want to help it expand operations.

Investors can also rightfully be disturbed by the idea of profiting from corporations they oppose. Suppose Evil Corp is literally dumping poison into the only fresh water supplies of a poor village. If you the dumping because it will kill people in the village, you probably don't want to profit from the dumping either.
Any investor on this board is going to be a price taker with respect to any stock they invest in. They simply aren't going to impact market prices in the volumes in which we would deal. So, they aren't going to materially impact the stock price.

Also, you are assuming that someone buying shares of a company will cause that stock to go up. That's not necessarily the case. Sometimes we buy stocks and they go down. Why. We are price takers in the market.

Also, even if a I go buy "Good" corp - every company has a web of interrelationships. Employees of "good" company might drive Gas guzzling Humvee's to work, while smoking, and driving drunk. Guess what - "good" company's success pays them the salary to do that. A web of vendors to Good Corp may off-shore production of supplies to sweatshop's working people 25 hours a day. Again, payments and business relationship facilitate that.

Need to get buy this idea that "Good" intentioned companies (whatever that is) can still have a web of bad externalities.

Buy indexes. Give what you have left over to charity to have a real impact. Feel good exercises are not productive.

Edit - not to mention - my investment in Good or Bad corp never actually goes to the company - the money goes to the seller of the security. Who knows what they may be up to with that money.
Last edited by leonard on Mon Apr 28, 2014 10:45 pm, edited 2 times in total.
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

berntson
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Re: Socially Responsible (Progressive) Fund Options

Post by berntson » Mon Apr 28, 2014 10:44 pm

CyberBob wrote: To add to berntson's ideas, you might also consider Motif Investing, which allows you to trade a basket of up to 30 stocks for just one $9.95 commission. https://www.motifinvesting.com.
This is a great idea. Thanks CyberBob! Buy two or three equal-weighted Motifs with socially responsible companies and rebalance them regularly. Spread your bets across as many industries as you can. Try to pick companies more or less randomly (only screening for ethical behavior). I might be careful about pre-built motifs. What you don't want is someone active stock picking in addition to social investing.

Depending on her views about government policies, this may be even better than bonds. I'm sure liberals and conservatives can both name loads of government actions they want no business in funding if they can help it.

Bfwolf
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Re: Socially Responsible (Progressive) Fund Options

Post by Bfwolf » Mon Apr 28, 2014 10:55 pm

I like the idea of a REIT fund or a government bond fund.

While I wouldn't exactly call REITs "progressive," I think in general they're pretty unobjectionable. They're investing in apartment buildings, shopping malls, office parks, etc. Nothing really sinister here.

Your opinion on whether a government bond fund is socially responsible depends largely on your opinion of our government, I guess.

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JMacDonald
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Re: Socially Responsible (Progressive) Fund Options

Post by JMacDonald » Mon Apr 28, 2014 11:00 pm

House Blend wrote:I think individual stocks or bonds is making things way too complicated.

Consider IRA certificates at a local credit union that is NCUA insured.

Might do a good job of passing her social responsibility test, and they can offer better returns than treasury bonds (and are equally safe).
This is a good suggestion. My credit union offers good products to its member. My savings at my credit union is put to good use despite the low interest rates it pays out. But that is true for government bonds too.
Best Wishes, | Joe

berntson
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Re: Socially Responsible (Progressive) Fund Options

Post by berntson » Mon Apr 28, 2014 11:04 pm

leonard wrote: Any investor on this board is going to be a price taker with respect to any stock they invest in. They simply aren't going to impact market prices in the volumes in which we would deal. So, they aren't going to materially impact the stock price.
Suppose we each can profit from dumping one bucket of poison in the river. As it happens, the poison isn't that potent, so a few buckets won't increase the odds of the downstream villagers dying. But if everyone thinks like that, everyone dumps a bucket of poison in the river. The result is that the villagers die.

Is it alright for me to dump my bucket of poison? After all, I know mine won't make the difference between life and death for the villagers. But I also know that if I dump a bucket and everyone else does for the same reasons, the villagers will die.

Buying stock works the same way. Whether I buy Evil Corp makes no material difference. But if everyone thinks like that and buys Evil Corp as a result, the stock price will go up and Evil Corp will be able to expand operations. Individually we make no difference. Collectively we make a difference. Those who care about social activism typically care about doing things that collectively make a difference, even if they don't individually make a difference.
leonard wrote: Also, even if a I go buy "Good" corp - every company has a web of interrelationships. Employees of "good" company might drive Gas guzzling Humvee's to work, while smoking, and driving drunk. Guess what - "good" company's success pays them the salary to do that. A web of vendors to Good Corp may off-shore production of supplies to sweatshop's working people 25 hours a day. Again, payments and business relationship facilitate that.
Perfect should not be the enemy of the good. If I invest in Good Corp, some of the money will leak out (because of interconnections) and make it into the hands of Evil Corp. But Evil Corp will have less of money if I invest in Good Corp than if I invest directly in Evil Corp. Giving Evil Corp a bit of money indirectly is better than giving them more money directly.

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cheese_breath
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Re: Socially Responsible (Progressive) Fund Options

Post by cheese_breath » Mon Apr 28, 2014 11:32 pm

Just out of curiosity I wonder if Mrs. OP gives as much consideration to selecting an employer as she is about investing. It would be a shame for someone with 'progressive' values to have to earn their living working for Evil Corp.
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leonard
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Re: Socially Responsible (Progressive) Fund Options

Post by leonard » Mon Apr 28, 2014 11:37 pm

berntson wrote:
leonard wrote: Any investor on this board is going to be a price taker with respect to any stock they invest in. They simply aren't going to impact market prices in the volumes in which we would deal. So, they aren't going to materially impact the stock price.
Suppose we each can profit from dumping one bucket of poison in the river. As it happens, the poison isn't that potent, so a few buckets won't increase the odds of the downstream villagers dying. But if everyone thinks like that, everyone dumps a bucket of poison in the river. The result is that the villagers die.

Is it alright for me to dump my bucket of poison? After all, I know mine won't make the difference between life and death for the villagers. But I also know that if I dump a bucket and everyone else does for the same reasons, the villagers will die.

Buying stock works the same way. Whether I buy Evil Corp makes no material difference. But if everyone thinks like that and buys Evil Corp as a result, the stock price will go up and Evil Corp will be able to expand operations. Individually we make no difference. Collectively we make a difference. Those who care about social activism typically care about doing things that collectively make a difference, even if they don't individually make a difference.
leonard wrote: Also, even if a I go buy "Good" corp - every company has a web of interrelationships. Employees of "good" company might drive Gas guzzling Humvee's to work, while smoking, and driving drunk. Guess what - "good" company's success pays them the salary to do that. A web of vendors to Good Corp may off-shore production of supplies to sweatshop's working people 25 hours a day. Again, payments and business relationship facilitate that.
Perfect should not be the enemy of the good. If I invest in Good Corp, some of the money will leak out (because of interconnections) and make it into the hands of Evil Corp. But Evil Corp will have less of money if I invest in Good Corp than if I invest directly in Evil Corp. Giving Evil Corp a bit of money indirectly is better than giving them more money directly.
Look up the concept of a price taker. I don't control "everyone". I control me. And, I am a price taker that simply can't effect the price of a security. What everyone else does makes no difference what so ever.

My point is that optimizing social responsibility is not possible. There are too many connections and too much "bad".

BTW - you missed the biggest hole in all of this - the biggest cash flow - the investment - not dividends or earnings - doesn't go to any company. It goes to the counterparty in the security sale. And, you have no idea what that person is going to do with the largest part of the investment.

There are to many parties involved to do socially responsible investing over which you have no way of ensuring their responsibility.

Diversify with indexes, donate what you can afford to charity. Simple.
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

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CyberBob
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Re: Socially Responsible (Progressive) Fund Options

Post by CyberBob » Mon Apr 28, 2014 11:39 pm

berntson wrote:
CyberBob wrote: To add to berntson's ideas, you might also consider Motif Investing, which allows you to trade a basket of up to 30 stocks for just one $9.95 commission. https://www.motifinvesting.com.
This is a great idea. Thanks CyberBob! Buy two or three equal-weighted Motifs with socially responsible companies and rebalance them regularly. Spread your bets across as many industries as you can. Try to pick companies more or less randomly (only screening for ethical behavior). I might be careful about pre-built motifs. What you don't want is someone active stock picking in addition to social investing.

Depending on her views about government policies, this may be even better than bonds. I'm sure liberals and conservatives can both name loads of government actions they want no business in funding if they can help it.
Actually, now that I checked a bit further, FolioInvesting may be an even better deal with unlimited trades for a flat fee. And, a folio can have up to 100 stocks. And when adding new money, you can weight it across your portfolio how you want, e.g. even weighting across all positions with one click. Pretty slick. Dang, now I want to do this! :D https://www.folioinvesting.com

Bob

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