Global Investing: Good, but Better

Investors who avoid sin stocks often give up gains in their portfolio. One manager has a more profitable approach

In the stock market, as in life, no good deed goes unpunished. Take the case of socially responsible investing (SRI). There are 79 stock funds that practice the style, which typically involves screening companies for stellar environmental and labor practices while shirking sin sectors like tobacco, booze and gambling. Sounds good, right? Yet SRI funds are often mediocre performers, partly because those sin stocks do rack up profits. Through September, the do-good funds averaged a 6.26% return, trailing the average stock fund by 0.6%, according to the research firm Morningstar. "Over time, SRI funds perform about the same as non-SRI ones,"...

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