Companies with a policy of socially responsible investments and political contributions to Democratic candidates have outperformed the Standard & Poor's 500 index by an average of 13 percentage points annually over the last five years, according to a white paper released this month by Blue Investment Management, Columbus, Ohio.
The firm launched the Blue Large-Cap Fund and the Blue Small-Cap Fund earlier this month; both mutual funds invest only in companies that "act blue" and "give blue" by supporting humanitarian or environmental causes and donating to liberal political candidates.
The Blue Large-cap Index Fund is made up of about 75 S&P 500 companies — including Apple Computer Inc., Progressive Direct Insurance Co., Google Inc., Starbucks Corp., Gap Inc. and Costco Wholesale Corp. — that are innovative, flexible, employee-centered in terms of health-care and other benefits and otherwise deemed "progressive," the white paper said. The Small-cap Fund is made up of roughly 350 Russell 2000 companies.
An investor who put $100 in the market-capitalization weighted "blue" portfolio five years ago would have approximately $239 today, minus fees, according to "The Blue Factor: Why Progressive Leadership is a Better Predictor of Stock Performance than a Good P/E Ratio." By comparison, an investor who put $100 in the S&P 500 at the same time would now have approximately $134.
"Blue" companies' returns were 15.6 percentage points higher over the five years than so-called "red" companies (firms that make political contributions to Republican candidates).