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A fund for earth lovers
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September 8, 2000: 2:03 p.m. ET
As social investing hits mainstream, one of the oldest funds is soaring
By Staff Writer Martine Costello
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NEW YORK (CNNfn) - Fund manager David Schoenwald has spent his life fighting for social causes on and off Wall Street.
He went to Mississippi in the 1960s to help get out the black vote. He worked as a lawyer for poor people fighting the government. He buys utility and energy stocks that don't pollute the environment.
And lately, his conscience has been making money for New Alternatives Fund.
 "In the 1960s, the dialogue at the time was if you're not supporting the solution, you're part of the problem," Schoenwald said. "That's the origin of the fund."
The fund, which he founded in 1982 with his father, Maurice, is up 55 percent year to date as of Sept. 6. It is one of the top-performing funds this year in the category, according to Morningstar.
"We are pleasantly and happily surprised by our good fortune," said Maurice, 80. "I think it's nice, but some of our shareholders will be embarrassed at the profit. They will be likely to give chunks of it away."
What's fueling the good year?
New Alternatives, with $51 million in assets, is doing so well because of so-called "clean energy" stocks like Fuelcell Energy (FCEL: Research, Estimates), the Schoenwalds said.
The company makes a device that creates electricity without combustion, David Schoenwald said. The stock represents about 11.7 percent of the portfolio and is up 488 percent this year, according to Morningstar.
"It makes electricity without polluting," the son said. "That should be a good investment. It's an efficient process that should be profitable."
Another holding, utility stock Calpine (CPN: Research, Estimates), which represents 5.44 percent of the fund, is up 188 percent this year, Morningstar said.
The company also invests in companies involved in recycling, natural foods and water purification. The fund owns about 34 stocks.
Social investing grows up
As socially responsible investing has hit the mainstream in recent years, many funds have soared on the performing charts, proving that you can invest with your conscience and still make money.
David Schoenwald recalls the time about 20 years ago when a handful of socially responsible investors would meet in a classroom at Columbia University.
 "You go to these (social investing) conferences now and they're in fancy hotels, and they serve dinners, and there's billions of dollars involved," he said.
Big funds like Pax World and Domini Social Equity have been strong long-term performers. Pax World, for example, has been in the top 15 percent of its category since 1993 except for two down years.
"Over the long term, they've been quite strong," said Catherine Hickey, an analyst at fund-tracker Morningstar. "A lot of these funds have been around for a while and have strong management teams."
This year has also been a big year for new socially responsible funds to debut, including funds by TIAA-CREF and Vanguard, Hickey said. There are about 61 funds in the category, she said. That number doesn't even include all of the new ones, she said.
But many of the bigger socially responsible funds are getting hurt by volatility in big technology stocks in 2000, Hickey said. Pax World is up just 7.6 percent as of Aug. 31, while Domini Social Equity is down 1.2 percent in the same time, according to Morningstar.
New Alternatives has a more volatile long-term record, Hickey said. It lost 10 percent in 1998, and gained 8.47 percent in 1999, falling short of the S&P 500 by nearly 13 percent, Morningstar said. It has been at the bottom of its category every year since 1993, though it has a 15-year annualized return of 10.99 percent.
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"This year is kind of an aberration," Hickey said. "It probably would be good for very specific investors with specific environmental screens in mind. But only a small portion of the portfolio."
Maurice Schoenwald acknowledges the stellar returns are unusual.
"It is not likely we will grow at the same rate as we have this year," the elder Schoenwald said.
A family tradition of liberalism
The elder Schoenwald got the idea for the fund during the energy crisis of 1973, when many Americans spent much of their time waiting at the gas pumps to fill up their car tanks.
Schoenwald, a lawyer by profession who loved to sail, called the fund "Solar Fund." They eventually changed the name to New Alternatives.
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"I came from a tradition of family liberalism," the father said. At 15, he joined the NAACP even though he isn't black. He's a proud member of the ACLU. And like another well-known social activist, Ralph Nader, Schoenwald also regularly ran for office on the liberal party line - sometimes for judge, state senate or district attorney.
"These are views I've held since I was a teen-ager," the father said. "I'm an old guy. I don't need to do this. But it's something I want to do." 
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