A Registered Investment Advisor

For the DIY (do it yourself) investor that is looking at some different mutual funds to invest in, in which case said investor will likely google “socially responsible funds” and click on the first couple of links – an article from Kiplinger that is over three years old, and a link to Social Funds, a very informative site with simple, though outdated, design standards. There are a lot more options in funds and investment managers but it takes a little digging.

I would like to briefly profile two equity funds that are both broad-based core stock funds and could be a great pillar in an investor’s portfolio. They are very different from one another in terms of how they are managed and both have historical returns with a past record of beating their benchmarks.

The Appleseed Fund was launched in 2006 by Pekin Singer Strauss Asset Management (Chicago) as a contrarian, value-investing fund aimed specifically at owning sustainable companies. In this case the guidelines of defining ‘sustainable’ are broadly defined as companies that balance profits with social and environmental awareness. They screen out companies with significant profits from tobacco, alcohol, gambling, weapons, or pornography and for the last five years have screened out “too big to fail” banks. For potential investments that pass the initial screen, the Appleseed Fund has a value investing lens which means they estimate an ‘intrinsic value’ for the stock based on multiple models and will only purchase a stock if it is currently priced more than 35% below that estimated intrinsic value. The idea being that the stock will move toward that intrinsic value over time (months or years).

The managers currently have what is considered by many to be a very conservative stance with about 19% in Gold as of July 2015. Holdings beyond precious metals center around an overweight in technology and communication companies, and underweights in financial services, healthcare, utilities, and consumer goods. Overweight and underweight means that compared to the index, this fund has either more or less, respectively, of a certain sector. As example, 12% of the index are classified as technology companies whereas the Appleseed Fund has 25% of its stock investments in technology. One would conclude that the managers of the fund believe the technology companies that they have picked will do better than the overall market so by having more capital in this sector they hope to provide better returns.

The Shelton Green Alpha Fund is indexed to the S&P 500 and invests in companies that have above average growth potential and are leaders in managing environmental risks and opportunities. The Green Alpha Fund is heavily overweighted in technology including companies such as: Canadian Solar, Vestas Wind Systems, First Solar, and Tesla Motors. The Green Alpha Fund, as the name suggests, is heavily focused on companies with an environmental slant either as their product or as a core company value.

As a growth oriented fund, the managers are looking for companies that have a potential increase in their stock price, versus companies that are kicking out cash dividends. The fund could be a good play for investors that see a long term value in owning companies that are addressing environmental challenges – especially through technology – and have an investment horizon that is longer so they can be patient as industries and sectors transform to be more environmentally conscience over time (either through public opinion, regulation, or business need).

Select the following links for more information: JackSchniepp, RyanAndrews, SociallyResponsibleInvesting CascadeFinancialStrategies


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

SOURCES: Morningstar, appleseedfund.com, sheltoncap.com