BOSTON — Anita Green doesn't approve of gambling. The director of social research for the Pax World Fund Family says: "It is all the pursuit of easy money, rather than the work ethic. It creates an unfavorable atmosphere for children."
Ms. Green may be in a minority. Sixty-eight percent of Americans report having gambled at least once in the past year, losing $50 billion in legal wagering alone.
Moreover, gambling has increased every year for two decades, often at a double-digit rate, the National Gambling Impact Study Commission noted in its report last month.
And in the past 25 years, "the United States has been transformed from a nation in which legalized gambling was a limited and relatively rare phenomenon into one in which such activity is common and growing."
But apparently enough people share Green's negative view of gambling that the Pax group excludes the stock of gambling companies - along with firms in the tobacco, liquor, nuclear power, and defense businesses - from the portfolios of the three funds it manages.
Some 60,000 socially conscious investors have given Pax $1 billion of their money to look after.
"Many concerned investors will want to avoid having their assets in mutual funds that attempt to profit from a vice that inflicts crushing social costs on American society," states Green.
Several other mutual-fund families screen out gambling stocks. (See chart, below.)
To stir up business, Pax commissioned a study by Wiesenberger, a Rockville, Md., firm that compiles mutual-fund data, on which major mutual funds include gambling stocks in their investment portfolios.
More than a third of the 20 largest funds do, the Wiesenberger review found. These include the Vanguard 500 Index (second-largest fund), Vanguard Windsor II (No. 8), and Fidelity Puritan Fund (No. 10).
Depending on timing, investments in gambling companies could have helped the performance of some of these mutual funds. "Gaming" stock prices have gone up and down dramatically in the past five years.
Since a low point last fall, the Gaming Index of the Chicago Board Options Exchange has risen from 123 to 247.
The Pax World Fund (800-767-1729) has performed well without gambling stocks. As of July 14, it has had a year-to-date return of 10.4 percent, a one-year return of 21.1 percent, and an annualized return in the past three years of 22.7 percent.
The fund is a balanced fund, investing in both stocks and bonds. This more conservative approach to investment has not produced as huge gains as many pure equity funds have won in recent years.
Nonetheless, the Pax fund's performance has rated four stars (out of a possible five) by Morningstar Inc., a Chicago group that keeps mutual-fund statistics.
Another rating service, Lipper Analytical Services, puts the Pax World Fund at seventh out of 175 balanced funds.
Green describes herself as the chief "gatekeeper" for Pax. Financial analysts at the firm's offices in Portsmouth, N.H., pick possible investments in stocks or bonds. These are passed on to her and screened for suitability for the Pax funds portfolios.
The negative factors for a company stock, such as revenues from gambling, are obtained from social databases, newsletters, and phone calls to the firms.
Green figures she rejects about 35 percent of stocks suggested by the analysts.
Pax also screens positively for companies that provide quality-of-life goods and services, such as health care, technology, pollution control, housing, utilities, and education.
Gambling, she maintains, does not help the quality of life. It often takes money that might support a family - "grocery money." A chunk of that money goes to the gambling operation since the odds always favor the house.
Americans spend $680 billion a year on gambling, more than the $450 billion a year they spend on groceries.
The national commission, Green notes, estimates 15.4 million Americans are problem and compulsive gamblers. It urged a moratorium on the expansion of gambling in the nation.
She describes gambling as "an industry that creates more addictive behavior than illegal drugs, puts the biggest bite on the pocketbooks of those who can least afford to pay, and corrupts the political process through massive influence peddling."
Hot gambling-free funds
Investors who object to gambling can buy into mutual funds that screen out companies linked to the activity. More than a dozen mutual-fund companies offer such products. Below are this year's top-performing, gambling-free funds as of June 30.
Fund name YTD 1-yr. 3-yr.*
IPS Millennium 36.1 56.1 35.1
Amana Growth Fund 25.6 38.7 19.4
MMA Praxis Growth 16.1 16.4 20.6
Calvert Social Equity A 15.7 21.1 19.2
Parnassus Fund 15.5 26.4 18.8
Citizens Emerging Growth 13.9 36.0 23.5
Neuberger Berman Soc. Resp. 11.5 15.7 20.4
Domini Social Equity Fund 11.5 25.3 31.1
Parnassus Equity Income 11.3 21.4 15.6
Source: Socialfunds.com *annualized
(c) Copyright 1999. The Christian Science Publishing Society