Fund Screen: The top-performing socially screened bond funds

Fri Jun 7, 2013 11:13am EDT

By David Randall
    NEW YORK, June 7 (Reuters) - Massachusetts became the first
U.S. state to sell so-called green bonds, and fund investors
should be prepared for more to come.
    Tuesday's auction, which drew $130 million in orders for
20-year debt sold with interest rates between 3.20 percent and
3.85 percent, will exclusively fund clean water, energy
conservation and similar projects. 
    While Thomson Reuters data shows environmental
infrastructure among the uses of proceeds from about $1.7
billion in municipal bonds sold this year, this was the first
time a state used the "green bond" moniker to target socially
responsible investors.
    It probably will not be the last. About $640 billion -
double the figure from 2010 - is now invested using social
screens, according to the Forum for Sustainable and Responsible
Investment. 
    The majority of those funds go into stocks that pass screens
for issues like the company's environmental impact, social
policies and involvement in the weapons, alcohol or tobacco
businesses. Bond funds, meanwhile, tend to invest in either the
debt of those same companies or in government securities. 
    Younger investors and affluent investors are finding the
category more attractive, experts say.
    "The first 600 times I heard about impact investing, I
thought 'tree huggers,'" Sallie Krawcheck, former head of Bank
of America's global wealth and investment management division,
said at Reuters Global Wealth Management Summit this week. "But
the ability to use one's capital to support what one believes in
without giving up performance is becoming increasingly
appealing." 
    Fund investors can choose from 29 socially screened bond
funds, according to Lipper. Here are the five top performers
over the last year through May 31, as well as their five-year
annualized performance. 
    
    
 Fund        Trading     Assets      1-year      5-year
             Symbol                  return %    annualized
                                                 return %
 PAX World   PAXHX       $566.2 mil  14.4        7.5
 High Yield                                      
 Calvert     CYBAX       $90.1 mil   14.1        9.3
 High Yield                                      
 Bond                                            
 Timothy     TPHAX       $41.1 mil   13.1        7.6
 Plan High                                       
 Yield                                           
 GuideStone  GGBFX       $243.9 mil  8.9         7.6
 Global                                          
 Bond                                            
 Calvert     CINCX       $1.2 bil    6.7         5.0
 Income                                          
 Fund                                            
 Source: Lipper, Morningstar
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