There are some who report that socially responsible investments lag conventional investment vehicles. Now comes along a report from the Social Investment Forum (SIF) that reviewed 160 socially responsible mutual funds from 22 members. It found that the vast majority of the funds -- 65 percent -- outperformed their benchmarks in calendar year 2009, most by significant margins.

These socially responsible funds topped benchmarks across nearly all asset classes, including balanced, large cap, small cap and global funds, as well as bonds.  The performance data that was analyzed by the Social Investment Forum covered all of 2009 and was provided by an independent third party, Thomson Reuters.

Which were the best performers? The top SRI mutual fund performance were the 73 large cap funds, the largest single category of SIF member funds, where nearly three out of four (72.6 percent) outperformed the S&P 500. 

And how did these funds compare with the S&P 500? On average, large cap SRI funds bested the S&P 500 by more than 6 percentage points.  A majority of the large cap funds offered by SIF members also outperformed the S&P 500 over three years and over 10 years.    (See full table, http://www.socialinvest.org/resources/factsheets_resources/documents/123109SIFFundPerformance.pdf.)

“This analysis underscores the reality that socially responsible investments offer what are genuinely competitive returns,” said Cheryl Smith, chairman of the board at SIF and president at Boston-based Trillium Asset Management Corporation.  “In fact, the 2009 data show that SRI funds specializing in large cap stocks have turned in an extremely strong performance that outpaced the S&P 500 over both the short term and the long term.”

The 22 fund families represented in the SIF analysis are: Access Capital Strategies; AHA; Appleseed; Ariel; Azzad; Calvert; Community Capital Management; Domini; Gabelli; Green Century; Integrity; Legg Mason; Meeder Asset Management; MMA Praxis; Neuberger Berman; New Alternatives; Parnassus; Pax World; Portfolio 21; Sentinel; Walden; and Winslow.

SIF also introduced a new Mutual Fund Performance Chart for retail investors at  http://www.socialinvest.org/resources/mfpc/. The chart allows interested investors to learn more about SRI mutual funds based on asset class, performance record, approaches to environmental, social and governance (ESG or sustainability) issues, proxy voting guidelines, and other investment criteria. The Chart shows that more than 50 percent of SIF member mutual funds consider companies’ executive pay practices when developing their portfolios, and more than two-thirds look for companies with good records on climate change issues and community development.