Black eye for socially responsible investing
Black eye for socially responsible investing
Pax World Management was once a shining example of how socially responsible investing could work. Between 2001 and 2006, it generated returns of more than 14 percent while it stuck to its principles: no stocks of companies with links to weapons, alcohol, bad labor practices and gambling. Now comes news from the New York Post that two Pax funds held up to 8 percent of their portfolios in sin stocks. Gads! The SEC, which has slapped Pax with a fine, said Pax traders would regularly ignore the firm’s in-house warnings and hold banned stocks for as long as six months. These employees are no longer with the company apparently. This is a bit like a vegetarian finding out that the veggie chili he’s been enjoying for years had been laced with Spam bits. Makes you want to spit–and maybe even sue.
[With acknowledgments to Jim Kim of FierceMarkets.com]
For more: here’s the article
Read more about: SRE, socially responsilble investing, Pax World, Labor Practices
August 6th, 2008 at 10:06 am
Re Pax fine. Though not stated, it is likely that the pressure to perform for short term goals could be a factor. Most fund managers are measured for their short term performance, even though their investors have a supposed long-term horizon.
The average US mutual fund has over a 100% turnover of its holdings each year! Only when investors and investment managers move to a longer-term focus and will such misdeeds be less.
Incidentally, I’ve been following socially responsible investing for about forty years and have a site that covers the latest news and research on the subject. It’s at http://investingforthesoul.com/
Best wishes, Ron Robins