Fred Alger Management, a leading asset manager, and its Spectra Funds are calling for a shift in the composition of green fund portfolios to include companies in all industries that are making serious investments and commitments to change the way they do business. The partnership will now recognize non-traditional companies that are taking action to join the green team.
Fred Alger Management, a leading asset manager, and its Spectra Funds call for a shift in the composition of green fund portfolios to include companies in all industries that are making serious investments and commitments to change the way they do business.
"Companies across America and elsewhere are becoming increasingly aware that there is a strong correlation between 'doing well' and 'doing good,'" said Zachary Karabell, executive vice president, chief economist and portfolio manager at Alger. "As a result, mutual funds that specialize in socially responsible investing (SRI), or more specifically, 'green' investing, are expanding beyond their current status quo. Increasingly, we believe that these green funds should reassess their selection strategies, reflecting fundamental changes that are shaping the way companies approach business with a greater emphasis on environmentalism."
Conventional SRI and green funds generally employ screens against specific industries, which eliminate certain companies from their portfolios entirely. While those screens represent a strong statement of disapproval, Alger and its Spectra Funds argue that such negative screens have a limited ability to solve problems or promote change within a given industry. Furthermore, while some traditional green and SRI funds have performed well, many have sacrificed investment returns in order to uphold their ideals.
"Investors are beginning to reconsider the necessity of strict limitations on green funds," Karabell said. "They recognize that many non-traditional companies are taking action in order to become environmentally friendly and that those companies merit consideration."
Just as cutting edge, innovative companies were early adopters of information technologies in the 1990s because they saw how those technologies could improve operating expenses and augment the bottom line, Karabell argues, the same sorts of companies today are thinking in terms of how more sustainable business practices can enhance profitability: BP (which has had its share of operational issues lately) and Royal Dutch Shell consistently rank highly on "most accountable companies" lists for their extensive and externally verified reports on their environmental impact; the recent landmark $45 billion takeover of TXU Corporation was given a stamp of approval from key environmentalists when the new owners agreed to sharply reduce the number of coal-fired plants it had planned to build; cell phone makers like Nokia and Motorola are fast discovering that pursuing eco-conscious policies better enable them to access global markets; and technology and software leader Adobe's commitment to conservation has garnered its San Jose headquarters the title of greenest corporate building on record in the United States.
While these are only a handful of examples, it is becoming apparent that more companies across all industries - from energy to refining to technology - are working towards making a difference in the environment. To that end, forward-thinking green funds have already begun to include these formerly ignored companies in their portfolios and, as Alger explains, the categorical elimination of companies and industries from green funds is, in turn, becoming increasingly obsolete.
"In managing our own green fund, our overarching goal is to invest in innovative growth companies that simultaneously attend to issues of sustainability and the environment," said Christopher Walsh, vice president and senior analyst at Alger and co-portfolio manager of the Spectra Green Fund.
Fauzia Rashid, also a vice president and senior analyst at Fred Alger and co-portfolio manager of the Spectra Green Fund, added, "We continue to believe such companies represent an enormous opportunity for investors."
Karabell added, "We understand and respect that some people will disagree with our stance. However, we firmly believe that participation in funds like the Spectra Green Fund provides encouragement for companies to continue to invest in environmental and sustainable practices and for others to become more environmentally conscious. The bottom line is that if we are collectively successful - we being companies, investors, and green funds - it will make a tremendous difference in our world."
In order to promote awareness of next wave of green investing and to reach out to investors who may be interested in its new Fund, the Spectra Green Fund has undertaken a direct marketing campaign through Google and will be participating in a range of conferences focusing on sustainability and the environment, including: The Wall Street Green Trading Summit, taking place April 16 and 17 in New York City; the 10th Annual Milken Institute Global Conference, taking place April 23-25 in Los Angeles; and the 2007 LOHAS 11 Forum, taking place May 14-16 in Los Angeles.
About Fred Alger Management
Founded in 1964, Fred Alger Management, Inc. is a leading asset management firm employing a bottom-up approach in its attempt to identify the fastest growing companies in their respective sectors. For more than 40 years, Alger has followed a rigorous process, a consistent approach, and a core philosophy: find dynamic, innovative companies creating change and invest in them. Fred Alger Management offers investment advisory services to separately managed, sub-advised and wrap accounts. Fred Alger & Company, Incorporated offers mutual funds as well as institutional funds for defined benefit and defined contribution plans. For more information, please visit www.alger.com. For information on Fred Alger Management's Spectra Funds and the Spectra Green Fund, please visit www.spectrafund.com.
The views expressed are the views of Fred Alger Management, Inc. as of March 2007. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, Inc. These views are not meant to provide investment advice, should not be considered a recommendation to purchase or sell securities. Individual securities or industries/sectors mentioned, if any, should be considered in the context of an overall portfolio and therefore reference to them should not be construed as a recommendation or offer to purchase or sell such securities. Portfolio compositions will change and holdings mentioned may not be indicative of current or future portfolio composition. At 12/31/06, the Spectra Green Fund owned Adobe Systems representing 1% of its net assets. The Spectra Funds did not own BP, Royal Dutch Shell, TXU Corporation, Nokia, Motorola or Google. Stocks of these companies may or may not be held by one or more other accounts or funds managed by Alger. Holdings are subject to change.
The Spectra Green Fund's environmental focus may limit the investment options available to the Fund and may result in lower returns than returns of funds not subject to such investment considerations.
Investing in the stock market involves gains and losses and may not be suitable for all investors. Growth stocks tend to be more volatile than other stocks, as the prices of growth stocks tend to be higher in relation to their companies' earnings and may be more sensitive to market, political and economic developments.
Before investing, carefully consider a fund's investment objectives, risks, charges and expenses. For a prospectus containing this and other information about a fund call us at 1.800.711.6141, or visit us at www.spectrafund.com. Read it carefully before investing.
NOT FDIC INSURED. NOT BANK GUARANTEED. MAY LOSE VALUE.
Fred Alger & Company, Incorporated, Distributor. Member NYSE, SIPC.
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As a result of the spin off, ADP shareholders received one share of Broadridge Financial Solutions, Inc. stock for every four shares of stock they held in ADP on March 23, 2007. Approximately 138.5 million shares of Broadridge stock were distributed on Friday March 30th to ADP shareholders.
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