Advertisement
Investing

What It Means to Be Green

Spectra Green takes a broader view of environmentally-friendly investing.

You wouldn't expect to find Valero, the nation's largest oil refiner, among the holdings of an environmentally conscious "green" fund. Such funds tend to avoid energy and mining companies because they pollute. But Valero, along with Diamond Offshore Drilling and mining giant Freeport-McMoRan Copper & Gold were all recent holdings of Spectra Green, the newest addition to the Alger fund lineup.

Advertisement - Article continues below

Launched at the end of 2006, Spectra Green invests in fast-growing, innovative companies of all sizes that have shown "a commitment to environmental sustainability," according to the prospectus. Look up Spectra's ticker symbol (SPEGX) and you'll discover that its record reaches back to 2001. That's actually the record of the fund's predecessor, Alger Socially Responsible Institutional. Zachary Karabell, Spectra's chief economist, says the fund was reconceived to focus on environmental issues and take a more "dynamic" approach to socially screened investing.

That translates to looser standards on what constitutes a "green" investment. Most socially screened funds rigidly avoid entire industries, such as energy, tobacco, firearms and alcohol. Karabell argues that such stringent screens ignore companies within those industries that are taking steps to improve their environmental records. "We live in the real world, not the ideal world," he says. "Simply not investing in industries where you find pollutants does little to advance the needle."

Advertisement - Article continues below
Advertisement
Advertisement - Article continues below

Rather than focus on what companies are doing wrong, Spectra considers what they are doing right. For example, Valero made the cut because of its strides to reduce sulfur emissions and produce cleaner-burning fuels.

Buy and sell ideas come from a team of 30 research analysts, each of whom specialize in a specific industry for this and other Spectra funds. Co-managers Fauzia Rashid and Christopher Walsh then make the final call on what goes into the portfolio. They look for fast-growing companies with accelerating revenue and earnings growth. Then they use the environmental screens, which Spectra contracts out to a research firm. "More than anything else, we're a growth manager with a green skew," says Karabell.

Since the beginning of 2007, the fund, which charges 1.25% in annual fees, has returned 5%.

Spectra Green isn't the only socially screened fund that's been relaxing its criteria. In October, the oldest socially screened fund, Pax World Balanced (PAXWX), abandoned its zero-tolerance policy on alcohol and gambling. Calvert, a Bethesda, Md., fund family, is considering broadening its screens for nuclear power companies, since some electric utilities have developed alternative energy programs.

Advertisement
Advertisement

Most Popular

Social Security Recipients, Veterans Must Act Now to Get Extra $500 Stimulus Check
Coronavirus and Your Money

Social Security Recipients, Veterans Must Act Now to Get Extra $500 Stimulus Check

The deadline for seniors and veterans to request an additional $500 stimulus check for a dependent child is approaching fast. See how you can claim yo…
September 25, 2020
Trump Promises $200 Prescription Drug Card for Seniors
Medicare

Trump Promises $200 Prescription Drug Card for Seniors

Medicare beneficiaries will soon receive a debit card in the mail that they can use to pay for prescription drugs.
September 25, 2020
Election 2020: Joe Biden's Tax Plans
taxes

Election 2020: Joe Biden's Tax Plans

With the economy in trouble, tax policy takes on added importance in the 2020 presidential election. So, let's take a look at what Joe Biden has said …
September 18, 2020

Recommended

10 of the Best Target-Date Fund Families
mutual funds

10 of the Best Target-Date Fund Families

The best target-date funds are a 'set it and forget it' approach to your retirement, but which fund family should you trust your money?
September 17, 2020
Best Bond Funds for Every Need
Investing for Income

Best Bond Funds for Every Need

In a changing market, it’s important to remember why we hold bonds in the first place.
September 15, 2020
How to Build a Bond Portfolio
Becoming an Investor

How to Build a Bond Portfolio

No single bond (or even bond fund) can do it all. We'll help you match your goals with appropriate fixed-income picks.
August 27, 2020
Time to Buy Japanese Shares?
Foreign Stocks & Emerging Markets

Time to Buy Japanese Shares?

In a weak global economy, T. Rowe Price Japan finds firms with healthy balance sheets.
August 27, 2020