More investors are doing good in retirement

CHICAGO — Socially conscious and faith-based investing is gaining traction in the retirement plan arena. While relatively few companies offer employees the opportunity to invest their 401(k) assets according to social or religious values, the number of those that do appears to be growing, according to industry sources. Of investors who were offered socially conscious investments in their companies’ retirement plans, 61% were invested in them, according to a survey of 800 people in December by Harris Interactive Inc. of Rochester, N.Y., for The Calvert Group Ltd. of Bethesda, Md. “We’re getting a lot of interest on the institutional side, which is new for us,” said Carsten Henningsen, chairman of Portland, Ore.-based Progressive Investment Management Corp., which runs Portfolio 21, a socially conscious world stock fund. “There’s been a remarkable increase from consultants and advisers who have included us in their platforms.” Portfolio 21 has seen its assets climb to $191 million over the past year, from $100 million. For the one-year period ended Tuesday, Portfolio Management gained 17.87%, compared with 13.64% for the average fund in its category. Portfolio 21 isn’t the only socially conscious or faith-based fund seeing a pickup in interest from plan sponsors. “The concept of building 401(k) products around socially responsible funds is definitely new on the 401(k) front,” said Ross Brown, senior vice president of ExpertPlan Inc., an East Windsor, N.J.-based provider of defined contribution plans. In September 2005, ExpertPlan joined with Robert Thomas to form Social(k), a retirement plan provider that specializes in offering socially conscious and faith-based funds to plan sponsors. Springfield, Mass-based Social(k) offers funds from 19 different fund groups. So far, funds offered through its platform are available in 50 corporate retirement plans. Already this year, however, 12 more plan sponsors have signed up to offer funds through Social(k), said Mr. Thomas, a financial adviser and the firm’s president. In fact, Social(k) expects to increase its base of plan sponsors by 150% this year, he said. “We’ve filled a niche,” Mr. Thomas said. However, Social(k) isn’t the only company positioning itself to take advantage of the proliferation of this trend. Also entering the 401(k) arena is Bloomfield Hills, Mich.-based Schwartz Investment Counsel Inc., which runs the Ave Maria Mutual Funds. The company offers faith-based options through platforms such as that of Boston-based Fidelity Investments. For the three-year period ended Tuesday, the Ave Maria Growth fund gained 12.20%, versus 10.15% for the average mid-cap-growth fund. The company just began making a push for the 401(k) market and is in about a dozen different such plans. “The retirement plan market is a natural progression with our fund,” said Bob Schwartz, director of marketing for Schwartz Investment Counsel. It is apparent that investors are interested in investing in socially conscious funds, said Christopher J. Cordaro, a certified financial planner with Regent Atlantic Capital LLC of Chatham, N.J. That said, he is cautious about advising plan sponsor clients to include a socially conscious fund in their account. “There’s some debate back and forth whether socially responsible funds do better than general investments,” Mr. Cordaro said. Indeed, many advisers are wary of faith-based or socially conscious funds, Mr. Thomas said. “Most people think this market is just too small to be bothered with,” he added. Another criticism of such funds is that they tend to put values ahead of performance. But Mr. Thomas disagrees with that. “The performance of these funds has actually showed to outperform [their peers],” he said. “The thought used to be that you have to sacrifice principle for profit; you don’t.”