by: Renee Sewall
This summer, significant media attention focused on the efforts in Congress to defund Planned Parenthood. Congressmen advocated for this change given that, among other reasons, many Americans object to our tax dollars being used for abortions. However, how many of us are unknowingly supporting organizations that facilitate abortions or violate other cherished values through our investments?
If you and/or your spouse is a working professional, you most likely have some savings invested in mutual funds—through a retirement account or otherwise—and may not have any idea that you hold stock (and therefore are a partial owner) of many companies that provide products or services that conflict with your values. Mutual funds generally hold shares of stock in hundreds, sometimes thousands, of companies. For retirement plans with a current employer, you may have little choice in the available funds in which to invest your savings. However, for retirement plans from previous employers or for non-retirement savings, you do not need to settle for investing in a fund that holds stock of companies whose values you oppose.
Recent years have witnessed the emergence of socially responsible investing (SRI) mutual funds. These funds tailor their holdings to a wide variety of investor priorities using different screening criteria. Some market themselves to those with Catholic/Christian values, such as Ave Maria, LKCM Aquinas, Epiphany, New Covenant, GuideStone, and Timothy Plan mutual funds. Most of these funds exclude companies involved with alcohol, tobacco, gambling, pornography, and abortion, while the Catholic values funds generally also exclude companies that manufacture contraceptives or conduct embryonic stem cell research. (Interestingly, in light of recent events, several of these funds actually screen out companies on the basis of their contributions to Planned Parenthood as well.)
SRI funds from certain non-faith-based companies exclude stocks along similar lines. For instance, I was very excited to recently learn about the Social Core funds from Dimensional Fund Advisors (DFA). These funds screen stocks based on similar exclusions as the Catholic values funds mentioned above. However, while some SRI funds may entail a sacrifice in investor expectations regarding fees, diversification, and performance, the DFA Social Core funds do not. They boast strong performance relative to benchmarks, a high level of diversification, and surprisingly low fees. The one catch is that individual investors cannot invest in these funds on their own; the funds are available only to clients of investment advisors who use DFA funds (which partially accounts for why they are able to charge such low fees because it lowers turnover). If you are, or would be interested in, working with a financial advisor, this is a great option. If not, I would advocate investigating the funds above, which, as mentioned, vary in terms of social screens as well as performance and fees.
You may consider this issue and be tempted to brush it aside, thinking that changing your particular investments would not be a significant loss to the objectionable companies. However, most of the efforts of Women Speak For Themselves—social media campaigns; letters, emails, and visits to elected officials; etc.—are premised on the idea that our individual actions, taken together, can effect change. Maybe withdrawing your savings from such companies would not impact their balance sheet. But, I would estimate that the savings of like-minded Americans amounts to hundreds of billions of dollars. That is enough to make them notice. Together, let’s put our money where our mouth is and make a difference.
Ms. Sewall is a wife and mother of three, and a financial advisor at Professional Financial Solutions, LLC, in Fairfax, Virginia. She also enjoys contributing to her firm’s personal finance blog, Our2Cents.
Disclosure: Ms. Sewall works for an investment advisory firm that primarily uses DFA funds in its investment management services. It is one of approximately 35 firms in the Washington, DC area that have access to these funds. Ms. Sewall does not, however, receive any commission or other compensation for client use of these funds, and her firm is not required in any way to advocate or promote the use of these funds.
Disclaimer: The information in this article is provided for informational purposes only and should not be relied upon as personal financial advice.