A green fund that soars like ... a Net stock?
Jackson Robinson likes to talk about avoiding "the dirties."
That means he won't invest in companies with poor environmental records. Instead, he seeks out "the greens."
Mr. Robinson, investment manager for Green Century Balanced Fund, holds that buying the stocks and bonds of companies with clean environmental records gives him a "slightly favorable" performance advantage. Several studies confirm this, he says.
Green Century's performance advantage, however, has been more than slight. Last year, the fund ranked No. 1 among 448 balanced funds - that is, those which invest in both stocks and bonds in an effort to reduce risk compared to funds that invest only in price-volatile stocks.
Shares in Robinson's Boston-based fund were up 76.4 percent last year. That compares with an average return of 8.7 percent for funds in this investment category, according to Lipper, a New York group that ranks mutual funds.
Over the past three years, Green Century has returned an average 23.6 percent annually, over five years 22.8 percent. Both measures beat the average for balanced funds nicely.
But Robinson has another advantage, in the eyes of some analysts. He has only about $30 million to invest. He says he can put $1 million or $2 million of that money in a small, fast-growing firm and that can have "a major impact" on his fund's performance.
For example, Green Century's largest holding at year-end 1999 was NetOptix, a small company that makes components that expand the bandwidth capacity of existing fiber-optic cables. These cables cost about $70,000 per mile and are used for telephone, Internet, and other connections.
"Nobody can get enough of the devices," says Robinson.
The stock of the Sturbridge, Mass.-based firm has moved from about $20 a share last October to more than $100 last month, before sinking back some. Its price can move 10 percent in a day.
Enjoying huge capital gains, Green Century has been selling some NetOptix shares. It can't legally hold more than 25 percent of its assets in one investment. But NetOptix still makes up 15 percent of the portfolio of Green Century.
Robinson calls NetOptix "green" because the expansion of present fiber-optic cable capacity means less digging up the streets and the growth of a paperless society. The Internet means more employees work at home, saving energy and commuting time.
Green Century has had perhaps another advantage. It puts only 25 percent of its assets in bonds, mostly high-yielding junk bonds. Most balanced funds have about 40 percent in bonds, the remainder in stocks.
In a statement last month, Securities and Exchange Commission Chairman Arthur Levitt warned investors to look at more than the immediate past performance of a mutual fund.
"Chasing fund performance is often the quickest way to hurt your mutual-fund returns," he cautioned in a news release.
Robinson admits, as required by law, that "past performance is not a guarantee of future results." And, he adds, the No. 1 fund has "no place to go but down."
Nonetheless, he sounds convinced his strategy of investing in "well-managed environmentally responsible companies" will work in the future. Such companies, he says, have the potential for competitive advantages and cost reductions by minimizing environmental risk. They often have less waste to take care of.
Further, some are active in fast-growing young markets, including alternative and renewable energy. He mentions Vestas Wind Systems, a firm making windpower turbines. It's had a 300 percent rise in its share price - another coup for Green Century.
The fund also targets companies in such "green" and "healthy-living" markets as organic foods, e-commerce, and photovoltaics. He expects cell phones to be powered soon by photovoltaic (solar-cell) devices rather than batteries.
Robinson got an early start in environmentalism. During World War II, his parents, Ed and Carolyn Robinson, became fed up with city living. So they moved from a New York apartment to a largely self-sufficient six-acre "homestead" in Norwalk, Conn.
Robinson grew up with ducks, pigs, a milk cow, bees, rabbits, chickens, even a goat.
With that background, Robinson finds it rather natural to select "green" stocks. He does that not only for Green Century, but for some $100 million of endowments managed by his firm, Winslow Management Company, which serves nonprofits, pension funds, and the well-to-do.
(c) Copyright 2000. The Christian Science Publishing Society