Keeping an eye on divesting investments

The Detective and the Investor: Uncovering Investment Techniques from Legendary Sleuths

TEXT OF STORY

Doug Krizner: Are your mutual funds being socially responsible in their investing? One way to find out is by reading the fund's prospectus — it'll give detailed information on were the fund is putting its money, and whether those investments should concern you.

From WBUR in Boston, Curt Nickisch reports.


Curt Nickisch: Conference calls weren't exactly what Eric Cohen had in mind for his early retirement.

Eric Cohen: Anything that Save Darfur Coalition does, with respect to divestment . . .

The former corporate vice president still spends his days in meetings. His activism started when he heard that profits from companies like the Chinese oil concern, PetroChina, may be financing the mass killings in Sudan.

Cohen had money in PetroChina through his mutual funds with Boston-based Fidelity Investments.

Cohen: Why would I, as an investor, want my money invested in companies that connect me with this genocide?

Cohen got out, but wants Fidelity to get out altogether That's easier said than done.

Harvard business professor Peter Tufano says mutual fund boards and money managers have basically one mission: get the best return for investors. And lately, PetroChina has been a great bet — averaging a whopping 90 percent return over the last four years.

Tufano says when some investors want to forgo those returns for ethical reasons, well, the funds just aren't set up for that.

Peter Tufano: The first word in the phrase "mutual fund" is mutual. And that investment manager and that board must act in the best interest of all.

That's why it's remarkable the activist campaign got a reaction out of Fidelity. Last month, the mutual fund giant said in an SEC filing it had sold 90 percent of its U.S. shares in PetroChina.

Randy O'Neil is global sales manager at the Boston investment research firm KLD. He says the key to this cause was broad appeal.

Randy O'Neil: And so sure, I mean these things are gonna definitely come up, where people are gonna want to divest from everything in the world. But if they don't get a lot of support, it's just not gonna get off the ground.

Now, activists like Eric Cohen are turning their attention to other mutual funds. In the U.S., 40 fund groups and at least 100 individual funds still invest in PetroChina.

In Boston, I'm Curt Nickisch for Marketplace.

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