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Socially Responsible Investing
Through emails and questions at our presentations, we have noticed an increasing interest in applying
social criteria to investing.
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Known as Socially Responsible Investing (SRI), the website Social Funds defines SRI as
"the act of making investment decisions to achieve social as well as financial return."
Three main criteria
are applied to this type of investing.
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Screening companies for objectionable practices such as pollution, gambling, and nuclear weaponry
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Shareholder activism designed to change certain company behaviors
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Direct investment in disadvantaged communities
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While 403(b) and 457(b) investors cannot invest directly into stocks of individual companies they deem socially beneficial, they can invest in mutual funds that apply social screening
to their investments. One of the largest such funds available to many 403(b) and 457(b) investors is TIAA-CREF's Social Choice Equity Fund (symbol: TRSCX). According to its prospectus,
the fund "seeks a favorable long-term total return that reflects the investment performance of the overall U.S. stock market (Wilshire 5000) while giving special consideration to certain
social criteria." In particular, the company screens for: alcohol, tobacco, gambling, firearms, military weaponry, and nuclear power.
Investors can search other funds from companies such as Calvert, Dreyfus, and Vanguard at
SRI Fund Profiles and at
Socially Responsible Mutual Funds.
We also encourage you to post questions about this type of investing on our Discussion Board.
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