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May 19, 2003 at 08:00 PM
May 13, 2003 — If the sponsors of one mutual fund tell its portfolio managers to take a hike, they won’t necessarily be firing them.
The offering, the nature-friendly Sierra Club Stock Fund (SCFSX), was launched by the club, which is known for its environmental activism, in January.
The fund shuns companies that are judged to pollute or otherwise harm the environment, or that fail to pass other social screens. Its list of verboten investments includes logging, mining and oil companies; chemical or nuclear waste haulers; and weapons manufacturers, among others.
While similar to other so-called socially conscious funds, the Sierra Club Stock fund differs from them in that its environmental criteria is more stringent, people associated with the fund say. Also, it is connected to the non-profit organization, which has final say over which stocks make their way into the portfolio. (The club also offers a balanced fund that follows the same social and environmental guidelines in investing in bonds as well as stocks.)
“The discipline that the Sierra Club involvement brings to the (investment) process means that the focus remains on environmental purity, as much as that is possible,” said Henry Smith, one of the fund’s portfolio managers.
Smith is president and chief investment officer of Harris Bretall Sullivan & Smith LLC, which is responsible for half the portfolio, and also oversees endowments for the San Francisco-based club. The remainder of the fund is run by New York Life Investment Management LLC.
Harris Bretall seeks large, growing companies, while New York Life hunts for undervalued mid-cap stocks.
Smith said he looks for companies with the potential to generate earnings and sales faster than their rivals and the stock market, and that feature strong cash flow and industry positions.
Kathy O’Connor, who helps manage New York Life’s part of the fund, said she hunts for companies whose stocks are priced low compared to a company’s earnings, cash flow, sales and book value. She also likes to see improving margins and a catalyst that can boost a stock.
