Morningstar Advisor - June/July 2009 - 15

Advisor Profile Building a Business on SRI By David J. Drucker Marjorie Bennett balances her clients’ values with their need for good returns. Marjorie Bennett has seen firsthand the evolution of socially responsible investing. In the 1990s, as a vice president at Morgan Stanley, she made sales presentations to large endowment funds. “They’d ask about SRI, but institutions weren’t offering such investments then,” she says. Pickings were slim for individuals, too. In 1998, when she launched her firm, Aegis Capital Management, in Oakland, Calif., she and her clients wanted their portfolios to reflect their social values. It was a challenge because there weren’t that many SRI opportunities available. “In the early days of SRI,” Bennett says, “funds might exclude tobacco from a portfolio and call it socially responsible. It wasn’t until the Domini 400 Social Index Fund came out in 1989 that the SRI industry really distinguished itself. In the 1990s, families like Calvert and Ariel started offering socially responsible investments, and even the wirehouses were beginning to take notice.” She doesn’t have the problem of finding SRI opportunities now. Big changes have arrived to SRI, mostly in the past five years. Waiting for someone to develop more SRI index vehicles, Bennett was pleased to see the Vanguard FTSE Social Index Fund VFTSX. “The fund doesn’t have a great track record, but at least it lowered expenses and turnover,” she says. She also says that the two funds brought out by iShares—iShares KLD 400 Social Index DSI and iShares KLD Select Social Index KLD— are also valuable additions to the SRI market. Helping Hand economy to politics to climate change—all of which guide me in formulating each client’s SRI strategy.” To create a portfolio for a client, Bennett starts with three approaches to judge where the client is on the “purity spectrum.” First, the client can do a negative screen. For example, the client might want to eliminate funds that invest in alcohol or tobacco companies. Second, there’s the activism approach to make social change happen. A client might want to invest in companies in order to vote proxies to force the company to change its practices. Finally, a client might prefer to take a “best-of-breed” approach. For example, to maintain diversification and protect returns, the client can pick the most responsible company, or the least-offensive, in an industry, such as energy. The socially responsible investments that Bennett ultimately recommends to clients depend on where clients are on the purity spectrum and how important performance is to them. “I have some ‘generic’ SRI funds I like,” she says. “The Parnassus family of funds does a fabulous job, specifically with their fixed-income fund and their small- and mid-cap funds. Portfolio 21 PORTX is good for global investing. The iShares KLD fund is good for a tax-sensitive account.” More than viewing SRI as a business model or the best way to invest, Bennett, like her clients, sees it as a reflection of her own values. Bennett does want to help, if not change, the world. She starts by donating 100% of her firm’s profits to nonprofit groups, and she serves her community through her involvement in nonprofit organizations. Most recently, she joined the board of the YWCA Kauai—the only provider of domestic-violence and sexual-assault treatment on the Hawaiian island of Kauai. She’s also funding the development of the group’s Web site. Carrying this philosophy over to approximately 25 high-net-worth clients with investment portfolios averaging $1 million, Bennett has created a high-touch boutique firm, proving that there are enough clients who want SRI upon whom to build a practice. “My clients are very-aware people whom I meet with four times a year—often to talk about things other than investment performance,” she says. “We take a global investment approach, so we discuss everything from the MorningstarAdvisor.com 15
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Morningstar Advisor - June/July 2009

Table of Contents for the Digital Edition of Morningstar Advisor - June/July 2009

Morningstar Advisr - June/July 2009
Contents
New on MorningstarAdvisor.com
Letter from the Editor
Contributors
Is SRI a Relevant Investment Strategy?
A Head for Numbers
Building a Business on SRI
Investment Briefs
The Liquidity Premium
Navigating the SRI Patchwork
Profit and Progress
How the Fed Contributes to Crises
Holding Steady
Appleseed Adds Value to SRI Formula
Four Picks for the Present
Long-Term Investors Can Find Value among Industrials
Higher Yields, Hold the Risk
Bargains in U.S. Industrials
Mutual Fund Analyst Picks
50 Most Popular Equity ETFs
Undervalued Stocks
Most Popular Variable Annuities
New at Morningstar
Talkin’ ‘bout a Revolution
Morningstar Advisor - June/July 2009 - 47
Morningstar Advisor - June/July 2009 - Morningstar Advisr - June/July 2009
Morningstar Advisor - June/July 2009 - Cover2
Morningstar Advisor - June/July 2009 - Contents
Morningstar Advisor - June/July 2009 - 2
Morningstar Advisor - June/July 2009 - 3
Morningstar Advisor - June/July 2009 - New on MorningstarAdvisor.com
Morningstar Advisor - June/July 2009 - 5
Morningstar Advisor - June/July 2009 - 6
Morningstar Advisor - June/July 2009 - Letter from the Editor
Morningstar Advisor - June/July 2009 - Contributors
Morningstar Advisor - June/July 2009 - 9
Morningstar Advisor - June/July 2009 - Is SRI a Relevant Investment Strategy?
Morningstar Advisor - June/July 2009 - 11
Morningstar Advisor - June/July 2009 - A Head for Numbers
Morningstar Advisor - June/July 2009 - 13
Morningstar Advisor - June/July 2009 - 14
Morningstar Advisor - June/July 2009 - Building a Business on SRI
Morningstar Advisor - June/July 2009 - 16
Morningstar Advisor - June/July 2009 - 17
Morningstar Advisor - June/July 2009 - Investment Briefs
Morningstar Advisor - June/July 2009 - 19
Morningstar Advisor - June/July 2009 - 20
Morningstar Advisor - June/July 2009 - 21
Morningstar Advisor - June/July 2009 - 22
Morningstar Advisor - June/July 2009 - The Liquidity Premium
Morningstar Advisor - June/July 2009 - 24
Morningstar Advisor - June/July 2009 - 25
Morningstar Advisor - June/July 2009 - 26
Morningstar Advisor - June/July 2009 - 27
Morningstar Advisor - June/July 2009 - 28
Morningstar Advisor - June/July 2009 - 29
Morningstar Advisor - June/July 2009 - Navigating the SRI Patchwork
Morningstar Advisor - June/July 2009 - 31
Morningstar Advisor - June/July 2009 - 32
Morningstar Advisor - June/July 2009 - 33
Morningstar Advisor - June/July 2009 - 34
Morningstar Advisor - June/July 2009 - Profit and Progress
Morningstar Advisor - June/July 2009 - 36
Morningstar Advisor - June/July 2009 - 37
Morningstar Advisor - June/July 2009 - 38
Morningstar Advisor - June/July 2009 - 39
Morningstar Advisor - June/July 2009 - How the Fed Contributes to Crises
Morningstar Advisor - June/July 2009 - 41
Morningstar Advisor - June/July 2009 - 42
Morningstar Advisor - June/July 2009 - 43
Morningstar Advisor - June/July 2009 - 44
Morningstar Advisor - June/July 2009 - 45
Morningstar Advisor - June/July 2009 - 46
Morningstar Advisor - June/July 2009 - 47
Morningstar Advisor - June/July 2009 - Holding Steady
Morningstar Advisor - June/July 2009 - 49
Morningstar Advisor - June/July 2009 - 50
Morningstar Advisor - June/July 2009 - 51
Morningstar Advisor - June/July 2009 - Appleseed Adds Value to SRI Formula
Morningstar Advisor - June/July 2009 - 53
Morningstar Advisor - June/July 2009 - 54
Morningstar Advisor - June/July 2009 - 55
Morningstar Advisor - June/July 2009 - Four Picks for the Present
Morningstar Advisor - June/July 2009 - 57
Morningstar Advisor - June/July 2009 - Long-Term Investors Can Find Value among Industrials
Morningstar Advisor - June/July 2009 - 59
Morningstar Advisor - June/July 2009 - 60
Morningstar Advisor - June/July 2009 - 61
Morningstar Advisor - June/July 2009 - Higher Yields, Hold the Risk
Morningstar Advisor - June/July 2009 - 63
Morningstar Advisor - June/July 2009 - Bargains in U.S. Industrials
Morningstar Advisor - June/July 2009 - 65
Morningstar Advisor - June/July 2009 - Mutual Fund Analyst Picks
Morningstar Advisor - June/July 2009 - 67
Morningstar Advisor - June/July 2009 - 68
Morningstar Advisor - June/July 2009 - 69
Morningstar Advisor - June/July 2009 - 50 Most Popular Equity ETFs
Morningstar Advisor - June/July 2009 - 71
Morningstar Advisor - June/July 2009 - Undervalued Stocks
Morningstar Advisor - June/July 2009 - 73
Morningstar Advisor - June/July 2009 - 74
Morningstar Advisor - June/July 2009 - 75
Morningstar Advisor - June/July 2009 - Most Popular Variable Annuities
Morningstar Advisor - June/July 2009 - 77
Morningstar Advisor - June/July 2009 - 78
Morningstar Advisor - June/July 2009 - New at Morningstar
Morningstar Advisor - June/July 2009 - Talkin’ ‘bout a Revolution
Morningstar Advisor - June/July 2009 - Cover3
Morningstar Advisor - June/July 2009 - Cover4
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