Investors who want to be socially responsible have more options today than ever before. But is it possible to be socially responsible without trading off investment performance? Financial Advisor magazine has partnered with investment research firm Dorsey, Wright & Associates to identify socially responsible funds that also demonstrate technical leadership.
 
Socially responsible funds with more than $100 million in assets have been evaluated on two dimensions:

• “Fund Score,” which is a composite measure of market performance, taking into account price movements and the relative strength of the fund in comparison to peer funds and the market as a whole. 

• “rRisk Score,” which measures price volatility of the fund in comparison to the cap-weighted S&P 500 Index.
 
In the tables below, many socially responsible funds have scores above the "3" threshold that Dorsey, Wright defines as the minimum for new or existing positions. The highest-scoring funds are typically outperforming mainstream funds investing in similar asset classes. The DWA rRisk score provides a risk dimension to the rankings.  For instance, the highest-scoring fund in our list is Ariel Investor (ARGFX), with a market dominant 5.88 score, but the 1.61 rRisk score indicates that it is also more volatile.
 
The scores will be updated monthly and we'll spotlight one fund. The spotlight for May is the Parnassus Equity Income (PRILX). PRILX is a diversified U.S. large-cap equity fund that "takes environmental, social and governance factors into account in making investment decisions."  It shows significant strength vs. the equity income sector with a 4.98 Fund Score, .86 higher than the equity Income group.  As of April 25, it had a one-year price return of 19.47 percent.  The .9 rRisk score demonstrates volatility below that of the cap weighted S&P 500.

Figures in the charts below are as of April 25, 2013.

High Strength, Low Risk
Fund Score > 3, Below average volatility
           
    Name DWA Fund Score DWA rRisk Score  
  Equity Funds and ETFs      
    Parnassus Equity Income (PRILX) 4.98 0.90  
    Calvert Large Cap Core Portfolio Class A (CMIFX) 4.71 0.94  
    Ave Maria Rising Dividend Fund (AVEDX) 4.68 0.93  
    CNI Charter Socially Rspnb Eq Instl (AHSRX) 3.53 0.98  
    Calvert Moderate Allocation A (CMAAX) 3.41 0.68  
    Walden Equity (WSEFX) 3.05 0.99  
    Legg Mason Inv Counsel Social Aware A (SSIAX) 3.02 0.72  
  Bond Funds      
    Calvert Long-Term Income Fund Class A (CLDAX) 3.55 0.29  
    Calvert Income Fund Class A (CFiCX) 3.44 0.21  
    Calvert Bond A (CSIBX) 3.29 0.19  
    Ave Maria Bond Fund (AVEFX) 3.00 0.12  
           

 

High Strength, High Risk
Fund Score > 3, Above average volatility
           
    Name DWA Fund Score DWA rRisk Score  
           
    Ariel Fund Investor Class (ARGFX) 5.88 1.60  
    Neuberger Berman Socially Responsive Fund Inv (NBSRX) 4.97 1.06  
    Domini International Social Equity Fund Class (DOMAX) 4.92 1.33  
    TIAA-CREF Social Choice Equity Fund Instituti (TISCX) 4.87 1.03  
    Calvert Global Water Fund Class A (CFWAX) 4.74 1.14  
    Ave Maria Growth Fund (AVEGX) 4.71 1.12  
    Parnassus Workplace Fund (PARWX) 4.66 1.18  
    Parnassus Mid Cap Fund (PARMX) 4.40 1.03  
    Calvert Small Cap Fund Class A (CCVAX) 4.02 1.29  
    Ave Maria Catholic Values Fund (AVEMX) 4.01 1.14  
    Vanguard FTSE Social Index Fund Institutional (VFTNX) 3.98 1.05  
    Calvert Capital Accumulation Fund Class A (CCAFX) 3.90 1.29  
    VALIC Company II Socially Responsible Fund (VCSRX) 3.85 1.01  
    VALIC Company I Global Social Awareness Fund (VCSOX) 3.74 1.11  
    Calvert Social Index Fund Class I (CISIX) 3.71 1.02  
    DFA U.S. Social Core Equity 2 (DFUEX) 3.56 1.09  
    Calvert International Equity Fund Class A (CWVGX) 3.51 1.20  
    Parnassus Fund (PARNX) 3.45 1.41  
    Domini Social Equity Fund Investor Class (DSEFX) 3.34 1.04  
    Calvert Equity Portfolio Class A (CSIEX) 3.02 1.06  
           

 

Low Strength, Low Risk
Fund Score < 3, Below average volatility
           
    Name DWA Fund Score DWA rRisk Score  
  Equity Funds and ETFs      
    Calvert Balanced Portfolio Class A (CSIFX) 2.89 0.57  
    Pax World Balanced Individual Investor Class (PAXWX) 2.74 0.86  
           
  Bond Funds      
    Calvert Tax-Free Bond Fund Class A (CTTLX) 2.95 0.29  
    Calvert Ultra-Short Income Fund Class A (CULAX) 2.37 0.05  
    Parnassus Fixed Income Fund (PRFIX) 2.04 0.23  
    Domini Social Bond Fund Investor Class (DSBFX) 1.75 0.13  
           

 

Low Strength, High Risk
Fund Score < 3, Above average volatility
           
    Name DWA Fund Score DWA rRisk Score  
           
    DFA Emerging Markets Social Core Portfolio (DFESX) 2.81 1.49  
    Parnassus Small Cap Fund (PARSX) 2.54 1.39  
           

  DWA Fund Score: The DWA Fund score ranks the technical strength on a scale of 0 through 6 using an equation based on price trending and relative strength.  Funds with scores above 3 are considered by Dorsey Wright to be “investment grade”.   Funds with scores close to 6 are “market dominant."
  DWA rRisk Score: The DWA rRisk score measures the risk of the group on a relative basis. The calculation uses the 3 year Standard Deviation average of the group or fund divided by the Standard Deviation of the Cap Weighted S&P 500 Equity Index. Ratios higher than 1 demonstrate higher risk than the market benchmark and ratios less than 1 demonstrate lower risk than the market benchmark.

Disclosures: The information contained herein has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs.  Accordingly, investors should not act on any recommendation (express or implied) or information in this material without obtaining specific advice from their financial advisors and should not rely on information herein as the primary basis for their investment decisions.  Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources believed to be reliable (“information providers”).  However, such information has not been verified by Dorsey, Wright & Associates, LLC (DWA) or the information provider and DWA and the information providers make no representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein.  DWA and the information provider accept no liability to the recipient whatsoever whether in contract, in tort, for negligence, or otherwise for any direct, indirect, consequential, or special loss of any kind arising out of the use of this document or its contents or of the recipient relying on any such recommendation or information (except insofar as any statutory liability cannot be excluded).  Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.  Neither the information nor any opinion expressed shall constitute an offer to sell or a solicitation or an offer to buy any securities, commodities or exchange traded products.  This document does not purport to be complete description of the securities or commodities, markets or developments to which reference is made.

Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.    You should consider this strategy’s investment objectives, risks, charges and expenses before investing.  The examples and information presented do not take into consideration commissions, tax implications, or other transaction costs.

Each investor should carefully consider the investment objectives, risks and expenses of any Exchange-Traded Fund ("ETF") prior to investing. Before investing in an ETF investors should obtain and carefully read the relevant prospectus and documents the issuer has filed with the SEC. ETF's may result in the layering of fees as ETF's impose their own advisory and other fees. To obtain more complete information about the product the documents are publicly available for free via EDGAR on the SEC website (http://www.sec.gov).

Dorsey, Wright & Associates is an independent and privately owned registered investment advisory firm based in Richmond, Virginia. Dorsey Wright is a leader in Point & Figure charting and Relative Strength analysis. Dorsey Wright’s Global Equity Research Platform is available by subscription, and has tools, charts, and analysis covering over 40,000 stocks, funds, and ETFs worldwide. Dorsey Wright also provides advisory, sub-advisory, and index licensing services through its Money Management division, with over $2 billion in total assets under management. For more information about Dorsey, Wright & Associates, visit www.dorseywright.com.