New Global Sustainability Fund Based on the Dow Jones Sustainability Index (DJSI)

On December 18th, the Dreyfus Corporation launched the first ever U.S. based - Global Sustainability Fund.

This fund will invest in stocks based on the The Dow Jones Sustainability World Index (DJSI).  Dreyfus will become one of over 70 financial institutions around the world licensed to offer such a fund.

They will be the first in the United States.

There’s currently over 6 billion dollars invested in social index funds tracking one of three of the Dow Jones Sustainability Indexes (DJSI).

From the Social Funds personal finance site:

“Launched in 1999 by Dow Jones Indexes, a leading global index provider, and Sustainable Asset Management (SAM), an asset management company exclusively focused on sustainability investments, the Dow Jones Sustainability World Index measures the performance of global sustainability leaders.

Following SAM’s latest global analysis of corporate sustainability leadership, completed in September, 33 companies will join the index, while 25 firms will be deleted – increasing the number of component companiess to 320 from 312.”

The DJSI is controversial in that it chooses “best in class” stocks from any business sector, including the sin sectors - such as tobacco, gaming, and arms manufacturing.

“Companies chosen from these sectors have met the criteria of moving towards future world sustainability,” say the managers of the DJSI.  “If you exclude them, you do not give them an appropriate incentive to improve.”  Also, we cater to mainstream investors who want to be exposed to the entire economy in their portfolios. The exclusion of an industry is an ethical decision, with so many different views on what industry is considered ’sin.’ We therefore follow a flexible approach of providing a composite index and at the same time subset indexes that exclude certain industries. And then the asset manager or the licensee can decide which path to follow.”

Socially responsible investment companies (SRI)such as Calvert Group follow a similar approach, though certain sectors, such as arms manufacturing, are always excluded.

It’s always been a difficult decision for me when investing for retirement- do I have enough money to retire, or do I invest in SRI stocks?  Through the years I’ve monitored the SRI’s, and they just haven’t been able to cut it in terms of returns.  I’m hoping this relatively new and more moderate DJSI approach will be the answer.

What do you think about it?

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