Humanistic Funds

IF You are concerned about social issues such as the spread of armaments or pollution, should you apply your ethical standards to your investments? That's your decision, of course. Many people think that trying to "do good" with your investments will keep you from doing well. But in fact, you can profit both financially and spiritually. Over the past 10 years, some of the mutual funds that are guided by their own ethical criteria have performed better than stocks in general. Other such funds have not done as well, so you have to be particularly selective.

Naturally, picking investments to match your ethics limits your choice. If you want to avoid arms makers, as well as alcohol, tobacco and gambling enterprises, you will not be able to invest in 60% to 70% of the stocks listed on the New York Exchange. You can achieve reasonable results, but you may not get the highest return possible.

Then too, choosing stocks to meet your standards can be troublesome. Consider the question of South Africa, in which drawing lines between specific companies may be difficult. For example, a corporation that has closed its operations in South Africa may still do business there through a middleman. And a company that has chosen to continue in South Africa may well be providing jobs and opportunities for blacks.

The first question to ask yourself is what you really hope to achieve. If you want to influence corporate or government policy, you may be disappointed. Chances are your investments just will not be big enough. You would probably be better off investing for maximum returns and donating some money to an action group. But if your goal is to keep a clear conscience, social investing can work for you.

If you want advice, an organization called the Social Investment Forum (711 Atlantic Avenue, Boston, Massachusetts 02111; 617451 3252) will send you a list of brokers who use social criteria.

Besides being highly selective in the stocks you buy, you can employ a sound method of letting your ethics guide your investments by putting your money in a mutual fund that judges companies by certain moral standards. For example, the Dreyfus Third Century Fund (800 645 6561) avoids corporations that have operations in South Africa and favors companies that endorse environmental protection, occupational health and safety, purity of consumer products and equal employment opportunity. Dreyfus Third Century rose 20.5% in the the twelve months to June 1, 1989.

The Managed Growth Portfolio of the Calvert Social Investment Fund (800 368 2748) keeps its money away not only from companies that do business in South Africa but also from those involved in nuclear power or weapons systems. It looks to invest in companies that practice equal opportunity hiring and have what the fund's managers consider to be strong community and environmental records. For the year to June 1, 1989, this fund went up 13.72%.

If you are concerned about energy development, you might want to try the New Alternatives Fund (516 466 0808). It searches for firms that conserve and produce alternative sources of energy, excluding nuclear power, and it will not invest in arms makers, companies doing business in South Africa or companies with poor environmental records. The fund gained 24.71% for the year to June 1, 1989.

The Pax World Fund (603 431 8022) also avoids arms makers, companies with gambling, alcohol or tobacco interests and those that it believes discriminate against minorities or women. In the twelve months to June 1, 1989, it increased 14.75%.

The Parnassus Fund is both a socially conscious and a contrarian fund. It invests in out of favor companies that its managers think make quality products, treat their employees well and are community minded. It rose 24.46% for the year to June 1, 1989.

If you want to avoid companies involved in South Africa, alcohol, tobacco and gambling, you might also consider one of the Pioneer Group funds (800 821 1239 or 617 742 7825 in Massachusetts). They were the first to adopt social criteria, and in the twelve months to June 1, 1989, their funds rose anywhere from 81/2% to 29.3%.

A money market fund that applies very strict rules is the Working Assets Money Fund (415 989 3200). It avoids not only companies doing business in South Africa but also banks that lend there. And it shuns U.S. Treasury securities as part of its antiweapons policy. The fund also searches for firms that support environmental protection measures, equal opportunity and worker health and safety rules. In the twelve months to June 1, 1989, it yielded 7.8%.