Banks are beginning to roll out the welcome mat to mutual funds that follow "socially conscious" investment strategies.

A handful of banks have begun offering such funds, which invest in companies that meet certain litmus tests of environmental, political, or social good.

Strong consumer demand has helped to popularize the funds, which are promoted as a way of "investing with a conscience."

Customer Demand

Investments in socially responsible funds, or "green" funds, as they are popularly known, have grown from $40 billion in 1984 to $848 billion in 1991, according to the Social Investment Forum, Minneapolis.

Milwaukee-based Marshall & Ilsley Bank recently started selling the Calvert family of socially responsible mutual funds after it noticed that customers were asking for socially-responsible investment options.

The bank had already been offering Calvert tax-exempt funds when it added the company's stock and bond funds to its menu, according to Steve Schueth, vice president at Calvert.

"That first relationship with our tax-exempt funds opened up more possibilities with M & I," said Mr. Schueth. "Because of consumer interest, we anticipate more potential as the years unfold."

Calvert has also established a relationship with the trust department at Dubuque Bank and Trust in Dubuque, Iowa.

Strict Investment Criteria

The trust department adheres to very strict investment criteria. For example, it will not buy funds that invest in casino companies, even though such stocks have been hot performers lately.

Dubuque Bank and Trust vice president and chief investment officer, Mel Miller, has recently started purchasing shares in Calvert's World Values Global Allocation Fund, a $35 million fund which was started last year. It emphasizes companies that promote environmental improvements and steer clear of those that do business in South Africa.

"From an asset allocation standpoint, we have need to invest internationally, and the Calvert Fund was exactly what we were looking for," said Mr. Miller.

Jack Farrell, vice president and sales manager at Working Assets in San Francisco, said his company is eager to explore the bank channel as a means of distributing their family of funds.

He also said that Working Assets is currently working to develop broker-dealer relationships and that they recently signed an agreement with Fisco Equity, a broker-dealer in Providence, Rhode Island.

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