Tuesday, May 20, 2008

SRI funds see cash inflow

[David Bogoslaw, "Socially Responsible Funds Hang Tough," BusinessWeek, 15 May 2008.]

This recent article from BusinessWeek highlights the staying power of SRI along with some of the risk questions coming up in recent posts:

"SRI managers said they don't think the market downturn has caused investors to waver in their commitment to socially responsible investing.

"In fact, some SRI managers are seeing net inflows of cash into their funds since the year began. All eight of Pax World's sustainable investment funds are showing net inflows year-to-date, including five funds launched within the past nine months, says Joe Keefe, chief executive of the Portsmouth [N.H.]-based investment firm. 'That surprises us because I've read that many fund companies are at net outflows because of the markets,' he says. 'It speaks to the fact that sustainable investing -- green investing, call it what you want -- is a very hot space right now.'

"Heightened fears about the economy and corporate profits and valuations may even be helping to attract some investors to SRI funds. One of the draws is active ownership, where shareholders can use their stakes and voting power to force changes in companies' ESG practices. 'A lot more clients in times like these, when they have concerns, want to feel a little closer to their investments. They want to know more [about] what's going on with the management of their companies,' says Reynders.

"Chris Brown, Pax World's chief investment strategist, sees a lot of money coming in from deferred compensation plans from various states. 'Municipal employees are demanding to have some kind of SRI/ESG fund in their menu,' he says. 'All the governance problems that have come up and all the environmental issues have driven tremendous demand for our products.'

"What's more, Keefe at Pax World thinks investing in socially responsible companies is a smarter long-term strategy because companies that meet higher ESG standards tend to be better positioned for long-term performance and carry lower risk."

No comments: