Can an investor really do well while doing good?
The results of the Domini 400 Social Index, which recently passed five years of "live" performance, indicate that - in a bull market at least - the answer is yes.
The annualized total return for the socially screened stock index was 12.52% for the five years ended April 30, compared with 11.4% for the Standard & Poor's 500, according to Kinder, Lydenberg, Domini & Co. Inc., Cambridge, Mass., which maintains the index.
Steven Lydenberg, research director at KLD, acknowledged that the index - which is more growth-oriented and has a smaller average market capitalization than the S&P 500 - has yet to see a bear market. However, he said, the five-year results are an encouraging sign that socially screened portfolios don't have to be lackluster performers.
"A five-year performance record shifts the burden of proof to those who argue that there is an inherent cost to socially screened investing," Mr. Lydenberg said.
The Domini index avoids companies in the gambling, tobacco and liquor industries and companies with poor social records in other areas, such as equal opportunity or environmental protection.
