15
Morningstar FundInvestor
October
2013
the investor returns are
9
.
2%
versus
7
.
7%
for total
returns. That’s pretty impressive.
I started to think about how many socially responsible
investors seem to care as much about the social
screens a fund runs as they do about its performance.
Is it possible this makes for a more patient investor?
We’ve tested total return of
SRI
funds, and they
almost always come up close to average. This means
that
SRI
screens don’t add or subtract much value.
Some proponents have said they do add value, while
SRI
’s harshest detractors have said the screens
really hurt performance. The evidence says it’s a wash.
But does
SRI
investors’ patience give them better
investor returns than the rest of the world? Well, no.
It turns out the
TIAA
-
CREF
fund was the exception.
The average percentile rank for five-year investor
returns is
45%
and for
10
years it is
52%
. So, once
more,
SRI
returns are right in the middle.
Most likely, the
TIAA
-
CREF
fund benefited from being
held mostly in
401
(k)s where steady investments
make for some of the best investor returns we see. In
fact, it had steady inflows each quarter starting in
the first quarter
2007
up until the third quarter
2011
,
when it was down to just $
1
million in inflows. So,
the timing wasn’t perfect, but steady inflows are good
enough because it means investors captured the
rebound well. But for every
TIAA
-
CREF
Social Choice
Equity, there’s a
Calvert Income
CFICX
, where five-
and
10
-year returns are bottom quintile.
I suppose one could argue that some people buy
SRI
funds just for their performance and are inclined to
jump out when performance goes south. If that’s the
case, then maybe the truly dedicated
SRI
investors
do a better job, but there’s no way to extract that from
the data.
Danoff and Roth to Comanage Fund
John Roth of
Fidelity New Millennium
FMILX
and
Fidelity Mid-Cap Stock
FMCSX
will be added as a
comanager of the $
23
billion, Silver-rated
Fidelity
Advisor New Insights
FNIAX
alongside Will Danoff.
The change will help Danoff, who also runs the $
97
billion, Silver-rated
Fidelity Contrafund
FCNTX
. In
the past, Advisor New Insights and Contrafund were
run in a nearly identical fashion. With the addition
of Roth, Advisor New Insights likely will include more
mid-cap stocks in the future, which Roth incorpo-
rates at his other charges to a greater extent than
Danoff, who’s had less flexibility given the size of
his asset base.
Brandywine Shareholders Approve Reorg
Shareholders of Brandywine funds voted to approve
Friess Associates’ deal to buy back the firm from
AMG
. A long-running slump and massive outflows
prompted the move. Friess Associates is now
employee-owned.
Vanguard Plans Low-Volatility Fund
Vanguard said it will launch a global low volatility
fund in the fourth quarter.
The fund will be half U.S. and half foreign equities. It
will hedge away currency risk in order to reduce
volatility. Vanguard did not say what other tactics it
will use to reduce volatility. Some exchange-traded
funds have been launched to invest in stocks with low
beta, but we don’t know if that’s part of the plan
at Vanguard.
Vanguard’s Equity Investment Group will manage
the fund.
Although the fund is officially listed as actively
managed, it sounds like a close cousin to Vanguard’s
Tax-Managed Funds. Those funds are passively
managed but officially count as actively managed
because they will deviate from their benchmarks
in order to minimize taxes.
The fund will charge
0
.
30%
for Investor shares and
0
.
20%
for Admiral Shares. Investor shares have a
$
3
,
000
minimum investment while Admiral requires
a $
50
,
000
minimum.
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