Socially "responsible" investments

[jswen]

Does anyone have a suggestion for good funds that exclude big oil companies (specifically Shell)? I am looking for a fund for my daughter who has a problem with Shell. Thanks

[Midpack]

You'll probably want to exclude VGENX (which I own)...

Just Google socially responsible funds and look at their holdings.

[nisiprius]

One starting point. I used to own Pax World Balanced Fund (PAXWX), and I feel it's a decent fund with the typical good and bad points of SRI funds. 0.96% ER which is bad by Boglehead standards, but Morningstar calls it "below average." Growth chart not hugely different from Vanguard Balanced Index, but has lagged it over the last ten years. It has been in existence for a long time which I like. But for comparison with another actively managed balanced fund, Vanguard Wellington, which alas does hold Shell, has done much better.

If you go this way I think you and your daughter need to read up on the fund and its policies, and it might even be worth trying to contact them and asking them why they did not invest in Shell so that you'll be sure of being on the same wavelength.

Last semiannual report shows about 3/4 stocks, 1/4 bonds. 12.4% of its portfolio is energy stocks, and the companies listed are:

Baker Hughes, Inc. (d)
Canadian Natural Resources, Ltd.
ConocoPhillips
Ensco PLC , ADR
EQT Corp.
Noble Corp.
Noble Energy, Inc.
Penn West Petroleum, Ltd.
Quicksilver Resources, Inc. (a)(d)(f)
Range Resources Corp. (f)
Rosetta Resources, Inc. (a)
Sasol Ltd., ADR
Statoil ASA, ADR (f)
Suncor Energy, Inc. (d)

I find morningstar.com to be a very good place for finding this kind of information. Assemble the names or ticker symbols of funds that sound possible, type them in the "quote" box, wait for the name to drop down, click on it. To find out what's in the fund, click on "Filings," look for the latest semiannual or annual report, open it, and look for the "schedule of investments." Unfortunately a lot of these reports will include multiple funds in the same report so you need to carefully and make sure you're looking for the right one.

Three random funds to check out: Domini Social Equity (DSEFX), Vanguard FTSE Social Index (VFTSX), TIAA-CREF Social Index (TICRX). I haven't look at their holdings or their performance, they're just "funds I've heard of that might be worth looking at."

For the record, you should probably read what Larry Swedroe and Jared Kizer have to say about socially responsible investing in their book The Only Guide to Alternative Investments You Will Ever Need: The Good, the Flawed, the Bad, and the Ugly.. They judge SRI as "flawed."

[nisiprius]

If it is really mostly about Shell... if you wouldn't mind sharing with us, I'm curious to know what the specific issue is... you may be able to find some mainstream non-SRI funds that don't happen to invest in it. But if they are not SRI funds they could, of course, always change their minds. Obviously broad-based index funds are out. Just at a glance, and absolutely not not not recommending it, I look at Vanguard Dividend Growth Fund, VDIGX, and its last semiannual report shows:

Energy (12.2%)
Exxon Mobil Corp. 2,218,673 177,028
BG Group plc 6,511,053 153,510
Chevron Corp. 1,297,139 134,928
Enbridge Inc. 3,651,198 120,088
ConocoPhillips 1,624,565 116,953

Exxon Mobil isn't Shell, but if her objection extends to other "big oil companies" I guess that wouldn't do.

Believe it or not, Fidelity Contrafund (FCNTX) doesn't seem to show any Shell in its current holdings, or Exxon either. I don't follow individual stocks and have no idea why a fund might or might not pick it. Fidelity Contrafund is a very big, popular, mutual fund that is today's candidate for "proof that active management works," although it's pretty well paralleled the S&P for three or four years. It counts as a fund that people have heard of, it's in lots of 401(k) plans, the sort of fund that few will criticize you for picking. "Contrafund" means it claims to be contrarian and to look for stocks that other funds don't include. Again, not not not recommending, just clicking here and there and looking.

Here's what it holds for energy. I have no idea if these companies are good guys or bad guys. Most of the names are unfamiliar to me so I think they must be smaller companies anyway.

Energy Equipment & Services - 1.0%

Dresser-Rand Group, Inc. (a)
Schlumberger Ltd.
Seadrill Ltd.

Oil, Gas & Consumable Fuels - 6.8%

Anadarko Petroleum Corp.
Apache Corp.
Baytex Energy Corp. (d)
BG Group PLC
Birchcliff Energy Ltd. (a)(e)
Canadian Natural Resources Ltd.
Chesapeake Energy Corp.
Clean Energy Fuels Corp. (a)(d)
CNOOC Ltd. sponsored ADR (d)
Concho Resources, Inc. (a)
Continental Resources, Inc. (a)
El Paso Corp.
EnCana Corp.
EOG Resources, Inc.
Gran Tierra Energy, Inc. (a)
Ivanhoe Energy, Inc. (a)(f)
Kosmos Energy Ltd.
Noble Energy, Inc. (e)
Oasis Petroleum, Inc. (a)
Occidental Petroleum Corp.
OGX Petroleo e Gas Participacoes SA (a)
QEP Resources, Inc.
Range Resources Corp.
Southwestern Energy Co. (a)
Tourmaline Oil Corp. (a)
Tourmaline Oil Corp. (a)(f)
TransAtlantic Petroleum Ltd. (a)(f)
Tullow Oil PLC
Ultrapar Participacoes SA
Whiting Petroleum Corp. (a)
Williams Companies, Inc.
World Fuel Services Corp.

[SSSS]

More hatred for Shell than BP? This does sound like an interesting story.

[Snowjob]

Why not hold the VT all world index and then sell short a single share of RDS to hold a neutral ( zero ) position on that company? or even sell a couple shares short and bet aginst it if she hates it that much =P

[PaddyMac]

M* article on socially responsible investing here;
http://news.morningstar.com/articlenet/ ... ?id=534113

[stratton]

What's socially responsible investing?

-Based on what the investment is in?

-Typical SRI fees are NOT socially repsonsible.

-Some SRI investments such as low income housing bonds can have high default rates. Not what I'd call socially responsible to investors.

So keep your fees down make sure you're not getting crap.

Paul

[fishndoc]

Perhaps an even more socially responsible approach would be to invest in what ever manner seems to promise the best risk/return prospects, regardless of the companies involved, and then donate whatever portion of the profits that come from "evil" companies to a worthwhile charity. I'll bet the recipients of the donation will not mind one bit that the funds came from Shell, Exon, big tobacco, Disney or whoever.

[greg24]

Invest in a total stock market fund. What better way to get even with Shell than to take some of their earnings via TSM and donate it to greenpeace? Or some anti-Shell environmentalist group.