Money Manager: SRI Believers Can Also Expect Performance

Chicagoattorney and money manager Marc Lane’s study found investors don’t have to sacrifice diversification or long-term performance when assembling equity portfolios based on positive screening of certain desired corporate behaviors.

In the study period, from January 1995 through December 2003, the most rigorously screened subsets of companies’ behaviors in Social Justice and the Environment achieved gross compound annual return rates of 14.62% and 15.58%, respectively (versus 13.05% for the benchmark universe, consisting of the 2,884 stocks for which data could be compiled within the Russell 3000 Index), a news release from Lane reported. Within the Social Justice practice area, the subset of Diversity/Employee Relations achieved gross rates of 14.38% and the subset of Human Rights achieved 14.83%.

Social Justice consists of Diversity/Employee Relations and Human Rights. The time frame analyzed was the most recent period for which sufficient social data could be collected for the 2,884 companies examined.

“This research is significant for investors seeking to support exemplary corporate behavior through their investments,” said Lane, in his announcement. “Our work indicates that, when Socially Responsible Investing (SRI) relies on positive behavioral screening, there need not be any performance give-up. Put another way, investors may now be able to align their portfolios with their social goals, without compromising their financial objectives.”

Lane continued: “If, for example, a non-profit or a family foundation is dedicated to relieving human suffering, combating HIV/AIDS, or running a food bank, it can be true to its mission and invest only in companies that have comparatively strong Human Rights records.”