"Socially responsible" mutual funds have long been associated with championing the environment and other historically liberal causes. But one former broker is offering a new twist on the idea.
Scott Ferenbacher, founder of the Institute for American Values Investing, is screening mutual funds for investments in companies "that promote or profit from pornography, anti-family entertainment, abortion, and nonmarriage lifestyles."
A self-proclaimed moral conscience of the mutual fund industry, Mr. Ferenbacher has identified more than 2,000 portfolios that have at least 15% of their investments in what he calls "cultural polluters."
"The basic philosophy is not one of censorship or boycotting these companies," Mr. Ferenbacher said. "They have a legal right to exist. This is a vehicle to empower a person to make an informed decision."
One portfolio on his hit list is Wells Fargo & Co.'s Stagecoach Corporate Stock Fund. More than 36% of that portfolio is in companies that offend Mr. Ferenbacher, including AT&T Corp.
According to Mr. Ferenbacher, AT&T has a mandatory training program designed to develop tolerance for gay and lesbian employees - a practice that contradicts his values.
"It's beneath comment," said a spokeswoman for San Francisco-based Wells, when told of Mr. Ferenbacher's complaint. "If he's citing AT&T, what's to be said?"
A pioneer of socially responsible investing is the Calvert Group, Bethesda, Md. A spokeswoman there said people can invest lucratively in companies that mirror their values.
"People should be able to find somewhere they can go that has an investment policy they can sleep with," she said. But she added that Calvert goes further than just identifying companies that do not champion the environmental and social causes it supports.
"We try to raise the issues with management," she said.
According to Mr. Ferenbacher, about 20 brokers have bought his screening software, which costs $400 a year. Another 25 have signed up to receive his institute's newsletter, at $36 for 10 issues.
Other funds that have incited Mr. Ferenbacher's ire include Reynolds Blue Chip Growth Fund, IDS Managed Retirement Fund, and Lutheran Brotherhood Fund, a small portfolio sold exclusively to employees of the Lutheran Brotherhood.
"The irony to that is unbelievable to me," he said.
Mr. Ferenbacher said he screens all 7,200 mutual funds on the market. Portfolios with more than 5% of their holdings in companies he deems morally offensive get "a yellow light," while those with more than 15% get a "red light" - a category that includes 33% of all funds.
Among the stocks he detests are Playboy Enterprises; Spectravision, which supplies hotels with mainstream and adult movies; and King World, which produces a talk show, "Rolanda," to which he objects.
Mr. Ferenbacher, whose company is based in Seattle, said he had recommended against stocks that offend him all during his 13-year career as a broker. But he said he became more active in 1994 after he attended a taping of a Phil Donahue show about strippers. Mr. Ferenbacher said he was pulled on stage, where he watched at close range while dancers peeled off their clothing.
"This isn't broadcast at 9 p.m. or later," he complained. "This is latch-key children time. It was clearly soft porn, and under studio lights, five feet away, it was hard core."
