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LIPPER: Market Slump Providing Unexpected Boost To Socially Responsible Mutual Funds

Published 07-30-02

Submitted by US SIF: The Forum for Sustainable and Responsible Investment

Washington, D.C. - Is the scandal-fueled stock market slump turning more Americans into socially responsible investors? According to Lipper data released today by the nonprofit Social Investment Forum, socially and environmentally responsible mutual funds experienced positive asset growth in the first half of 2002 while U.S. diversified fund assets fell off substantially. The Lipper data show that socially responsible mutual funds had their assets increase by 3 percent between January-June 2002, while the U.S. diversified funds experienced a 9.5 percent decrease in total assets.

"This data appears to confirm that there really is something to the anecdotal reports we are hearing about the ongoing market scandals spurring new people to join the ranks of socially responsible investing," said Steve Schueth, spokesman for the Social Investment Forum and president of First Affirmative Financial Network. "At the very least it's clear that socially conscious investors are willing to stand strong through market instability in order to remain in harmony with their personal values and see their money working to improve quality of life in society. One might say that the social investment industry is defying gravity at the moment. "

Data from Lipper also shows that in June 2002, an especially tumultuous period in which the S&P 500 lost over 13 percent, socially responsible mutual funds benefited from net inflows of $47 million, while U.S. diversified funds suffered from net redemptions to the tune of nearly $13
billion.

The new Lipper data comes on the heels of the most recent quarterly mutual fund performance report issued last week. Socially and environmentally responsible mutual funds continued to earn top marks through the first half of 2002, according to data released on July 23, 2002 by the Social Investment Forum. The performance data showed that 13 of the 18 screened funds (72 percent) with $100 million or more in assets tracked by the Forum achieved the highest rankings for performance from either or both Morningstar and Lipper for the one- and/or three-year periods ending June 30, 2002. Of the broader universe of 47 Forum-member funds with a three-year performance track record (including those with assets under $100 million), roughly three out of five (28 funds or 60 percent) received the highest marks from either Lipper or Morningstar through the first half of 2002. Both the Lipper and Morningstar analyses are based on time periods ending June 30, 2002.

"The market faces a real crisis of credibility, caused, in part, by a seemingly endless procession of corporate scandals," said Tim Smith, president of the Social Investment Forum and senior vice president of socially responsive investing at Walden Asset Management. "Socially and environmentally responsible mutual funds use their influence to promote more corporate responsibility through resolutions, dialogue and encouraging reforms in corporate governance. When you combine that far sighted leadership with good relative performance, screened funds are an increasingly attractive alternative for many of the nation's investors."

Important note: The Lipper, Morningstar and Social Investment Forum "snapshots" of the world of socially responsible investing all differ somewhat from each other. However, every one of the largest socially responsible mutual funds is tracked by all three groups.

ABOUT THE FORUM AND LIPPER

The Social Investment Forum is a national nonprofit membership association dedicated to promoting the concept, practice and growth of socially and environmentally responsible investing. The Forum's membership includes over 500 social investment practitioners and institutions, including financial advisors, analysts, portfolio managers, banks, mutual funds, researchers, foundations, community development organizations and public educators. The Forum provides cutting-edge research on trends in social investing, provides the nation's most comprehensive directory of practitioners in the field, and publishes a monthly Mutual Fund Performance Chart on its website, located at www.socialinvest.org.

Lipper, a wholly owned subsidiary of Reuters, is a leading global provider of mutual fund information and analysis to fund companies, financial intermediaries, and media organizations. Lipper clients manage more than 95% of U.S. fund assets. The firm, founded in 1973 and headquartered in New York, tracks 80,000 funds worldwide through its offices in major financial capitals in North America, Europe, and Asia.

US SIF: The Forum for Sustainable and Responsible Investment Logo

US SIF: The Forum for Sustainable and Responsible Investment

US SIF: The Forum for Sustainable and Responsible Investment

The Social Investment Forum (SIF) is the only national membership association dedicated to advancing the concept, practice, and growth of socially and environmentally responsible investing (SRI). Our members integrate economic, environmental, social and governance factors into their investment decisions and SIF provides programs and resources to advance this work. SIF's membership includes more than 500 social investment practitioners and institutions, including financial professionals, analysts, portfolio managers, banks, mutual funds, researchers, foundations, community development organizations, and public educators.

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