BOSTON -- State Street Global Advisors has created an affinity mutual fund that invests in companies with collective bargaining agreements with the International Association of Machinists and Aerospace Workers.
The SSGA IAM Shares Fund, launched last June, was built specifically for the IAM, the fifth largest union in North America.
The passively managed fund invests at least 65% of its assets in equity securities of companies with collective bargaining agreements with the IAM. Among the roughly 250 companies held in the fund are Harley-Davidson Inc., Boeing Co., General Electric Co., Lockheed Martin Corp. and Caterpillar Inc.
The rest of the fund is invested in stocks from the Standard & Poor's 500 index, specifically those in non-union industries such as technology, pharmaceuticals and banking.
Stephen Sleigh, director of strategic resources at the IAM, came up with the idea in 1994. He developed a "fantasy" fund by going through all of the IAM contracts and picking out about 360 that were with publicly traded companies.
The fantasy fund included a variety of large company stocks and, over the next four years, it tracked close to the S&P 500, he said.
In 1998, the IAM approached SSgA about making Mr. Sleigh's fantasy fund a reality.
"The idea was to build a fund for the Machinists based on their philosophy of investing in companies that employed union members, with a combined overall strategy that would track fairly close to the S&P 500," said Gus Fish, principal at SSgA and head of SSgA Funds.
From its inception June 1 through Dec. 31, the $67.2 billion fund returned 13.7%. Through January, said Mr. Fish, the performance of the IAM Shares Fund was within 10 basis points below the S&P 500.
The fund is now about 80% union companies and 20% non-union.
While there are other funds on the market that invest in stocks of unionized firms, the SSgA fund is the only union-specific fund.