How to track your fund's investment policies

Associated Press -

Web Posted: 05/08/2009 12:00 CDT

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Some of the nation's largest mutual fund companies are adjusting their policies to screen out investments that may be linked to human rights abuses abroad. Maybe you think that's a good thing, maybe not. So how do you find out about your fund's policies, and what do you do if you find them lacking? Here are some tips:

READ DISCLOSURES: Many fund companies post information about their policies online or mail it to investors. Look for "corporate responsibility policies" or "proxy voting policies." If you don't like what you see, contact your fund company and let them know your opinion. When proposals touching on human-rights issues make it onto proxy ballots, shareholders can vote. Watch your snail mail or e-mail for information on upcoming votes, or check the fund company's Web site.

TALK TO 401(k) DECISIONMAKERS: Your investment options may be limited if you invest in a 401(k) or other employer-provided savings plan. If your plan doesn't offer the options you're seeking, contact the employer's investment committee, or others who may be responsible for selecting the plan manager.

CONSIDER SOCIALLY RESPONSIBLE FUNDS: Some larger fund companies offer funds that seek to invest with social objectives in mind. And dozens of smaller boutique companies specialize in the socially responsible investing niche, offering funds that screen out everything from tobacco- and alcohol-related stocks to companies that charge interest on loans. Many also offer funds focusing on such areas as environmental issues or community investment.

USE A SEPARATELY MANAGED ACCOUNT: These products typically require a big initial investment, so they're generally not available to investors of modest means. Investment firms or consultants manage your money according to specifications you set. For example, a portfolio can be customized if you don't have a problem with tobacco stocks, but think alcohol investments go too far.

DO YOUR HOMEWORK: Information on socially responsible investing is available at such Web sites as http://www.socialinvest.org — the Social Investment Forum, a professional association for the socially responsible investing industry — and www.socialfunds.com, a personal finance site devoted to "SRI," as the industry often calls itself. KLD Indexes, a unit of KLD Research & Analytics, offers indexes and research on the investment performance of SRI funds at www.kld.com/indexes.