Rod Crane and Mary Brunson

Calvert Group Opens a Socially Responsible Fund of its Own

Rod Crane and Mary Brunson

Socially responsible index pioneer Calvert Group recently launched the Calvert Social Index Fund (ticker symbol: CALVIN) to track the performance of the Calvert Social Index. The Calvert index aims to be the broadest-based, most rigorously screened benchmark of large- and mid-cap socially responsible U.S. companies. Vanguard launched a fund based on the index in late May.

Social screening is performed on the 1,000 largest companies in the market. Calvert's in-house social research department looks for companies that meet its standards on issues such as the environment, workplace issues, product safety, community relations, military weapons contracting, international operations and human rights. Shareholder advocacy on social issues will also be a part of the fund's operations.

The index will be reformulated annually from a revised list of the largest companies, but quarterly changes may be made based on a company's performance on the social criteria. The fund's holdings will change as the index's composition changes.

The Calvert Social Index Fund is managed by Calvert Asset Management Company (CAMCO), which has served as investment advisor to the Calvert Group family of funds since 1978. World Asset Management, a subsidiary of Comerica with over 20 years of indexing experience, is the sub-advisor. Investors must purchase the fund from brokers and financial advisors, although it will also be offered to institutional investors.

The indexing bug has hit the socially responsible investing area, as the sector has more than doubled in size with other indexes beginning to challenge the hegemony of the Domini and Citizens' indexes. As detailed in the recent socially responsible index funds survey article, several other social index funds have been launched in the past year.

Fees on the Calvert Groups new fund are high, with a 4.75% load and a net expense ratio of 0.75% or no load and a net expense ratio of 1.75% depending on which class of fund you purchase. For comparison, Vanguard recently opened its own fund based on the Calvert Social Index. That fund has no load and an expense ratio of 0.25%.

Fund giant TIAA-CREF launched a fund of its own in recent months with an expense ratio of only 0.27%. In addition, last year, the Walden/BBT Domestic Social Index Fund and the Walden/BBT International Social Index Fund - the first social international fund to track an index - opened to investors. The Walden Funds have expense ratios of 0.75% and 0.91% respectively.