Increasingly, individuals get into terror-free investing

Some financial-services companies have taken a while to realize there is demand for such an option.

from the October 15, 2007 edition

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Two years ago, Sudan was the driving force behind terror-free investing. Investors were pulling their money out of companies that supported the regime associated with massacres in the Darfur region. Now there's increasing attention on Iran. Florida has pulled state funds out of companies linked to Iran, and California is poised to do the same.

Individuals can also participate. Mis­souri now offers a terror-free 529 fund open to anyone saving to pay for college. There's also a terror-free mutual fund, and other options are on the way.Recently, the Monitor's Laurent Belsie talked with Andrew Davenport, vice president of Conflict Securities Advisory Group, a Washington, D.C., firm that researches corporate links to terror-­sponsoring states. Here are excerpts from their conversation:

Why is interest in antiterror investing picking up?

Mr. Davenport: Sudan activists and Sudan-free investing led the charge and perhaps paved the way in some ways … but Iran is up there on the charts as well in the sense that they combine the two most pressing security concerns of today. In the state sponsorship of terrorism, they've been identified a number of years in a row by the US State Department as the leading state sponsor of terrorism. And certainly there are concerns out there reflecting their nuclear program and the possibility, if not the probability, … for a nuclear-weapons program.

When you combine those two issues … you're facing one of the most serious set of security concerns that the United States faces today.

And that's not lost, I ... think, on the American people.

Yet it's states, not individual invest­ors or mutual funds, who have led the movement.

It's not so easy for [average Americans] … to call up their investment adviser or investment-services firm and say: "Hey, I'd like to exclude companies doing business with Iran from this mutual fund." The problem is, that person is just one person of thousands of people who are invested in that fund. And it's taken a little while for some of the financial-services companies to realize that there is actually very broad demand on this topic.

On the institutional side, in the public space, you can deliver messages somewhat more easily. Certainly, there is some resistance to taking these kinds of steps. But when you have a legislature that gets involved and passes regulations that pension systems have to abide by, all of a sudden you've got a rather large pool of money that commands compliance with the issues that are being legislated.

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