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Socially responsible investing has been gaining traction in recent years, thanks to investors’ increasing inclination toward making related choices. Simply put, socially responsible investing is parking one’s money in companies, which, through their businesses or actions, have a positive social impact.
According to the US SIF Foundation’s 2018 biennial report, sustainable, responsible and impact investing assets accounted for $12.0 trillion of the $46.6 trillion in total assets under professional management in the United States in 2018. This represented a 38% rise from 2016.
In fact, most of this growth was driven by asset managers, who considered the environmental, social and governance (ESG) criteria across $11.6 trillion in assets in 2018, up 44% from $8.1 trillion in 2016.
Given the rapid growth in socially responsible investments, one could consider purchasing mutual funds that hold positions in the space. However, choosing the right mutual funds for your portfolio can be a daunting task. Let us, thus, take a look at two socially responsible funds and discuss which of these is best suited for your portfolio. Both the funds carry a Zacks Mutual Fund Rank #2 (Buy).
Parnassus Core Equity Fund - Investor Shares (PRBLX - Free Report) seeks capital growth and current income. The fund invests in U.S. large-capitalization companies that have long-term competitive advantages and relevancy, quality management teams and positive performance in the ESG criteria. The portfolio managers focus on high quality organizations that may outperform the market during downturns.
This Sector-Large Cap Value product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 14.8% over the 3-year and 10.1% of the 5-year period. To see how this fund performed compared in its category, and other #1 and 2 Ranked Mutual Funds, please click here.
The Parnassus Core Equity Fund - Investor Shares allocates its assets in the top two major groups — Large Growth and Large Value. Further, as of Jun 30, 2019, Microsoft Corp, The Walt Disney Co and Linde Plc were the top holdings for PRBLX.
This product was incepted in August 1992 and is managed by Parnassus Investments. PRBLX carries an expense ratio of 0.87% and requires a minimal initial investment of $2000.
TIAA-CREF Social Choice Bond Fund Retail Class (TSBRX - Free Report) aims for total return, mostly through current income. The fund invests the majority of its assets in bonds while focusing on certain ESG criteria.
The fund primarily invests in a wide range of investment-grade bonds and fixed-income securities, which comprise but aren’t limited to U.S. government securities, corporate bonds, taxable municipal securities and mortgage-backed or other asset-backed securities.
This Sector-Inv Grade Bond-Intermediate product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 3.4% over the 3-year and 5-year period. To see how this fund performed compared in its category, and other #1 and 2 Ranked Mutual Funds, please click here.
The TIAA-CREF Social Choice Bond Fund Retail Class allocates its assets in the top two major groups — Large Growth and Large Value. Further, as of Jun 30, 2019, 000MISB and US TREAS NOTE were the top holdings for TSBRX.
This product was incepted in September 2012 and is managed by Teachers Advisors LLC. TSBRX carries an expense ratio of 0.65% and requires a minimal initial investment of $2500.
Conclusion
Upon taking a closer look at PRBLX and TSBRX, we find that the former clearly outpaces the latter. First, PRBLX has provided investors with higher returns over the 3- and 5-year periods. Second, PRBLX has a three-year beta of 0.84, which is lower than TSBRX’s 0.93, indicating the lower risk associated with the former. Therefore, one should definitely opt for PRBLX as an addition to the mutual fund portfolio.
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Which ESG Mutual Fund to Buy: PRBLX or TSBRX?
Socially responsible investing has been gaining traction in recent years, thanks to investors’ increasing inclination toward making related choices. Simply put, socially responsible investing is parking one’s money in companies, which, through their businesses or actions, have a positive social impact.
According to the US SIF Foundation’s 2018 biennial report, sustainable, responsible and impact investing assets accounted for $12.0 trillion of the $46.6 trillion in total assets under professional management in the United States in 2018. This represented a 38% rise from 2016.
In fact, most of this growth was driven by asset managers, who considered the environmental, social and governance (ESG) criteria across $11.6 trillion in assets in 2018, up 44% from $8.1 trillion in 2016.
Given the rapid growth in socially responsible investments, one could consider purchasing mutual funds that hold positions in the space. However, choosing the right mutual funds for your portfolio can be a daunting task. Let us, thus, take a look at two socially responsible funds and discuss which of these is best suited for your portfolio. Both the funds carry a Zacks Mutual Fund Rank #2 (Buy).
Parnassus Core Equity Fund - Investor Shares (PRBLX - Free Report) seeks capital growth and current income. The fund invests in U.S. large-capitalization companies that have long-term competitive advantages and relevancy, quality management teams and positive performance in the ESG criteria. The portfolio managers focus on high quality organizations that may outperform the market during downturns.
This Sector-Large Cap Value product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 14.8% over the 3-year and 10.1% of the 5-year period. To see how this fund performed compared in its category, and other #1 and 2 Ranked Mutual Funds, please click here.
The Parnassus Core Equity Fund - Investor Shares allocates its assets in the top two major groups — Large Growth and Large Value. Further, as of Jun 30, 2019, Microsoft Corp, The Walt Disney Co and Linde Plc were the top holdings for PRBLX.
This product was incepted in August 1992 and is managed by Parnassus Investments. PRBLX carries an expense ratio of 0.87% and requires a minimal initial investment of $2000.
TIAA-CREF Social Choice Bond Fund Retail Class (TSBRX - Free Report) aims for total return, mostly through current income. The fund invests the majority of its assets in bonds while focusing on certain ESG criteria.
The fund primarily invests in a wide range of investment-grade bonds and fixed-income securities, which comprise but aren’t limited to U.S. government securities, corporate bonds, taxable municipal securities and mortgage-backed or other asset-backed securities.
This Sector-Inv Grade Bond-Intermediate product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 3.4% over the 3-year and 5-year period. To see how this fund performed compared in its category, and other #1 and 2 Ranked Mutual Funds, please click here.
The TIAA-CREF Social Choice Bond Fund Retail Class allocates its assets in the top two major groups — Large Growth and Large Value. Further, as of Jun 30, 2019, 000MISB and US TREAS NOTE were the top holdings for TSBRX.
This product was incepted in September 2012 and is managed by Teachers Advisors LLC. TSBRX carries an expense ratio of 0.65% and requires a minimal initial investment of $2500.
Conclusion
Upon taking a closer look at PRBLX and TSBRX, we find that the former clearly outpaces the latter. First, PRBLX has provided investors with higher returns over the 3- and 5-year periods. Second, PRBLX has a three-year beta of 0.84, which is lower than TSBRX’s 0.93, indicating the lower risk associated with the former. Therefore, one should definitely opt for PRBLX as an addition to the mutual fund portfolio.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>