Morningstar Advisor - June/July 2009 - 7

Letter from the Editor Mainstreaming SRI Socially responsible investing is for the dedicated. Not only do investors have to be committed to the causes of what they want to invest in, they have to be willing to do extra research to sort out a company’s environmental record or a mutual fund’s plethora of social criteria to find an investment that meets those values. And there are downsides. Shops and investors have a wide range of interpretations of what SRI is. SRI funds can be more expensive than non-SRI funds with similar investment styles, and their performances more rocky. These, and other challenges, are perhaps why that although three out of four advisors who responded to our On Topic survey (page 11) say they’ve had clients ask about SRI, only one out of five say they have more than 10% of assets under management invested in SRI vehicles. Clients seem to be initially interested in investing with their values, but in the end, they choose to invest elsewhere. If SRI has a way to go before becoming mainstream, perhaps its best hope is that the mainstream becomes more socially responsible. There is evidence of that occurring. The Obama administration, and others in government, is pushing social and green initiatives. To hear the “SEC commissioner actually talk about the importance of board diversity is very rewarding,” Amy Augustine says. She’s one of two veteran SRI research analysts from Calvert we interview (page 35). Both analysts describe the changes they’ve seen in companies over the past 10 years and argue that the smartest firms are realizing that being socially conscious is good for their bottom line. “Environmental, social, and governance issues are issues of risk management,” Augustine says. “By managing them well, a company is going to be better positioned to tackle the challenges that are coming in the future.” But in the here and now, SRI is complicated for most investors. Analyst William Samuel Rocco writes that although there are more choices than ever before, the quality of SRI funds is a mixed bag (page 30). “There still are a very limited number of attractive screened funds in many categories, making it very difficult to create a well-diversified, all-SRI portfolio,” he says. Rocco says that a lot times SRI investors have to be willing to compromise. But when it comes to investing, and one’s values, that can be a hard thing to do. New Markets & Economy Blog Jerry Kerns To better keep on top of the economy, we’ve assembled an expert team of contributors to blog daily on all things financial at MorningstarAdvisor.com. It’s also a place where readers can comment. Our team includes Michele Gambera, an economist with Ibbotson; Haywood Kelly, Morningstar’s head of equity research; Bob Johnson, an economic analyst with Morningstar; and Janet Briaud, senior advisor and CEO of Briaud Financial Planning. Please e-mail me your comments about the magazine to magazine_editor@morningstar.com. MorningstarAdvisor.com 7

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Morningstar Advisor - June/July 2009

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