Some Mutual Funds Avoid Defense Stocks
NEW YORK — What type of mutual fund do you invest in if you cannot tolerate the notion of owning military-related stocks? Easy. Consider investing in a socially-responsible fund, often called a "good works" fund. There are at least 25 of these funds, which generally "screen out" companies in industries such as defense, gambling, tobacco, and liquor.
"We have no defense contractors" or even subcontractors "in our portfolio," says a spokeswoman for Pax World Fund (800-767-1729.) The balanced (stock and bond) fund is up 9.9 percent though Oct. 31. Though below the 16.6 percent return of the Standard & Poor's 500 stock index, it is above the average return on the Lipper Balanced Fund Index, an index of all balanced mutual funds in the US. The Lipper balanced index is up a little more than 9 percent.
The Domini Social Equity Fund (800-762-6814) screens out companies that produce more than 2 percent of revenues from defense-related work. Domini does not count non-weapons work in this calculation. The fund is up 15.8 percent through Oct. 31.
The Calvert Group (800-368-2748) also uses defense-related screening for its funds, such as the Calvert Social Investment Equity Fund, up 15 percent through Oct. 31. Calvert weighs issues such as how much military production the company undertakes and whether it a secondary contractor, assembling parts, or puts an entire military-product together.