To Jack Brill, socially responsible investing isn't just for aging hippies.
"It's natural," he says.
"We believe most people want to be helpful and kind and most people want to leave the world a better place for their children and for future generations. These qualities are natural. Why invest in something you're going to be ashamed of?" asks the San Diego-based financial planner.
Mr. Brill's new book, "Investing With Your Values," written with his son Hal, lays out the reasons more people are investing in socially responsible businesses and mutual funds.
Many socially responsible investors, he says, are baby boomers, who are inheriting the greatest wealth of any generation in US history and striving to fuse that with the values that they grew up with.
"We believe that people who think about socially conscious investing really care about Earth, they really care about people," Brill says. "An awful lot of people inherently bring their values to the table."
According to a 1997 study by the Social Investing Forum, investors - individuals and institutions - poured more than $1.7 trillion into screened investments. Brill figures that number this year will top $2 trillion.
And socially responsible investors, he argues, can do as well as or better than those that don't take a values-based approach to their investments.
"Myth No. 1," Brill says, is that you have to sacrifice returns to put your money where your heart is.
He should know. In 1993, the New York Times asked him to build a hypothetical retirement portfolio using only the few dozen socially screened mutual funds available at that time. He would then compete against five other investment managers who could choose from thousands of funds.
His funds went through some rocky times early on. But for the past two years, his portfolio has outperformed the others in the Times exercise, leaving him in third place overall.
Brill has also been helped by the creation of more socially responsible funds. Mutual-fund research firm Morningstar now lists 66 such funds.
Brill takes a somewhat conservative investing approach, but avoids US Treasuries, which are used to fund all government programs.
"I love America," he says. "But I don't love everything America does with my money."
Instead, he recommends investors "buy government agency bonds that are dedicated to things that are good."
Brill includes a Ginny Mae government agency bond fund in his portfolio.
Investing with your values can be hard work. Socially responsible investors must keep a constant watch on the holdings of their funds and the activities of the companies within them. "Or hire someone to," Brill beams.
"Not all funds have shared in the glory," he says. As with any mutual fund, a lot depends on the manager. And new managers account for much of the improvement in socially responsible funds since the early '90s.
One index of socially responsible companies, the Domini 400, returned 21.5 percent a year from its inception May 1990 through December 1998, compared with 19.4 percent for the S&P 500. Other socially responsible indexes are doing even better, Brill says.
Social funds do better as a group than others, he says, for a variety of reasons. One is their growing popularity. Another is the industries they invest in.
"If you want to be sure you're not involved with pollution and a lot of other things, technology stocks answer an awful lot of problems," he says. "They have great employment practices, day-care centers; they fit so many categories."
To get utility stocks into their portfolios, social funds "have latched onto two ... winners: natural gas and water utilities. They've also latched onto communications -which is now a tech stock," Brill laughs.
Your holdings as a force for change
Socially responsible investing often involves avoiding companies involved in controversial industries, such as tobacco, alcohol, gambling, or firearms.
But financial planner Jack Brill says investors can go a step further. He cites three ways they can support causes they like:
Affirmative screening Looking for companies that do good, for example, by promoting diversity in hiring or developing clean-energy solutions.
Community investing Investing in companies that do good works locally, and saving in banks that loan to local businesses.
Shareholder activism Attending shareholder meetings to advocate certain causes, such as improving hiring practices and reducing pollution. Shareholders in Disney have used this tactic to pressure the company to divest divisions that produce R-rated movies, Mr. Brill says.
(c) Copyright 1999. The Christian Science Publishing Society