2000: NI Scores High in New York Times Fund Study

Company News, General / By lillie

This article is from our archives as part of the 100th issue special, celebrating twenty-five years of quarterly newsletters.

For seven years, we took part in a New York Times study to find the best investment portfolio. As the only socially responsible money manager invited to participate, our founder Jack Brill was the “long shot,” but Natural Investments excelled in the competition. It was a very satisfying and public refute of the myth that SRI sacrifices financial returns.

In 1993 the New York Times asked five of the nation’s leading investment advisers to design model portfolios for a hypothetical retirement portfolio for an investor having $50,000 and twenty years to go until retirement. I was asked to participate and create a portfolio using only socially screened mutual funds.

This competition, which appeared quarterly starting July 1, 1993 through its completion on June 30, 2000, became a high-profile opportunity to watch the evolution of Natural Investing’s success. Keep in mind that the other participants could choose from thousands of funds, while I was initially limited to the twenty existing screened funds. At first my portfolio lagged behind the others, due in part to the underperformance of an environmental sector fund and a short- lived market-timing fund that mis-gauged the strength of the then-developing bull market.

Over the course of the study my portfolio moved steadily up in the standings. Performance for the period from January 1, 1996 to the close of the study was especially noteworthy. My portfolio gained an annualized 21.12% compared to the range of 12.53% to 18.93% for the other competitors. The S&P 500 gained 20.97% for the same period. Many new socially screened mutual funds were introduced and performance significantly improved. During the course of the study the socially screened portfolio had ten winning quarters, more than any of the competitors.

The final results were a real opener to those who predicted that an exclusively socially responsible was destined to underperform because screening would limit one’s investment opportunities. We have always contended that social screening enhances investments because it identifies companies that are well managed, caring employers who provide goods and services that are wanted and needed. They also avoid companies involved with pending law suits such as the tobacco industry and environmental polluters. Hence, they add value to the stocks of the companies.

As you can see from the chart, my portfolio was extremely competitive. The annualized annual total returns for the top three contenders were extremely close. This is significant because my portfolio throughout the study was more conservative than the others. Mine was the only portfolio to have 15% of the assets in bonds. Note: The S&P 500 gained 18.13% for the period of the study.

The Times series shows that Natural Investors face the same challenges and have the same opportunities as other investors The ability to build a diverse portfolio from a growing pool of socially screened mutual funds proves that socially responsible investing is providing a “double bottom line”. Investors can get good financial returns while helping to make a more environmentally sustainable world. While “past performance is no guarantee of future results” this study should help squelch the critics of socially responsible investing and finally change Wall Street logic that insists we should make money any way we can, including helping to destroy the planet, and then donate to our favorite charity.

Written by advisor emeritus Jack Brill, Founder of Natural Investments, LLC.

Scroll to Top