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Rating:Firms Move Forward With Social Funds Not Rated 3.0 Email Routing List Email & Route  Print Print
Friday, December 20, 2002

Firms Move Forward With Social Funds

by: Sean Hanna, Editor in Chief

San Francisco-based Forward Funds has teamed up with the Sierra Club as a way for the firm to enter the socially responsible investing niche. The firm, which farms out investment management for its four funds to subadvisors, will initially offer two funds under the Siergara Club label. As part of the changes, the firm has also created new subadvisory mandates and is seeking shareholder approval to raise the fees it charges to the funds.

Under the terms of the deal Forward Funds will be the exclusive licensee of the Sierra Club name and investment screens. It will also be responsible for all marketing of the funs.

Forward will pay the Sierra Club between 10 and 20 basis points to select securities that meet its social and environmental guidelines for potential investments in the fund. The Sierra Club plans is able to those revenues to support objectives that include safeguarding wildlands, curbing urban sprawl, protecting national forests and working to stop global warming. Under the agreement, Forward will also be able to run advertising in the Sierra Club's magazine and provide editorial content.

The first Funds that will be offered through the relationship will be the Sierra Club Stock Fund and Sierra Club Balanced Fund. The Funds may be available to investors as early as January of 2003, according to Forward.

The Sierra Club Stock Fund will be a conversion of Forward's existing Forward Garzarelli U.S. Equity Fund. The fund is replacing Garzarelli Investment Management with two new subadvisors -- New York Life Investment Management and Harris Bretall Sullivan & Smith. It is also seeking additional fees with which it will pay the Sierra Club for its screening duties.

"These Funds let citizens hold corporations more accountable and give businesses incentive to take their responsibility to the environment seriously," said Carl Pope, Executive Director of the Sierra Club. "People who don't want to financially support companies that ignore the environment and, as a result, put our country and communities at risk, can now embrace investment opportunities that reward companies that share the vision and values of the Sierra Club."

"It is rare that a mutual fund family and its investors are passionate about what they are investing in," said J. Alan Reid, president of Forward Management. "The Sierra Club Funds allow people to invest in our planet's future. But it's really even more than that - it's an opportunity to unite your personal, social and financial interests. That is how we want to reward our investors."

The Sierra Club started the search for a fund partner about 18 months ago and was in conversation with Forward Funds for about a year, said Pope. "We talked to a number of funds," he added. "We looked for a fit; we do more rigorous screening than others and wanted a partner comfortable with that; we looked for a firm that would make them our relationship a priority; and we looked for a firm that was excited by the opportunity and has the resources to market it."

"Forward Funds met all three of those criteria," said Pope.

He added that the Sierra club has been investing its own portfolio using social screens for the past five to six years, and that it has learned that its performance closely tracks the market. "We developed the screens for our own needs and we seemed to be doing about what the market is doing performance-wise," he said.  

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