Robert Loest has traveled a convoluted road to become a portfolio manager, with a stop for a Ph.D. in biology and another 10 years spent shoeing horses. Still, some common threads link that past with his current work managing the Integrity Growth and Income Fund, a $44 million socially responsible investment offering.
Mr. Loests unwillingness to experiment on animals led him away from biology in the late 1970s, and animal rights remains an area of concern for the Growth and Income Fund. Rather than taking an all-or-nothing approach, Mr. Loest, a Knoxville, Tenn.-based senior portfolio manager with Integrity Mutual Funds Inc., said hes willing to invest in companies that are trying to do the right thing. For example, all pharmaceutical companies experiment on animals, but some, like Johnson & Johnson, are doing research aimed at minimizing or eliminating the practice, he said. Governance and environmental issues also figure more prominently in his value-oriented, bottom-up investment approach than in most SRI funds. The goal is to offer investors an option that doesnt require them to step outside of their moral universe to make money.
The fund isnt hampered in finding unvalued stocks that will reward investors in line with the iron law of statistical mean reversion, he said. And many of the biggest stocks including Johnson & Johnson, Microsoft Corp. and IBM Corp. are trading at generational lows. The growth and income fund has returned an annualized average 10.81% as of May 31 since its Jan. 3, 1995, inception, compared with 12.1% for the S&P 500.