Green Century Capital Management is a bit of an anomaly in the asset management business. Founded in 1991 by a coalition of state-based Public Interest Research Groups – including California PIRG, Colorado PIRG and Washington State PIRG – Green Century focuses exclusively on environmental issues. But, unlike most other asset managers in the socially responsible investment (SRI) space, 100 percent of profits earned by Green Century go to its ownership coalition to support their work on environmental initiatives.

 

So, not only does Green Century talk the talk, they also walk the walk – which should warm the heart of any dyed in the wool environmentalist.

 

Green Century Balancedis one of the family’s two offerings. Adhering to a “growth at a reasonable price” strategy using fundamental data, investment candidates are then screened based on “do no harm” environmental criteria. Based on that while the fund certainly favors companies taking proactive steps to preserve the environment, it will also take positions in companies whose operations have negligible environmental impact. It also excludes companies involved with the tobacco industry or the production of nuclear power.

As of the funds fourth quarter disclosures, its asset mix is inline with its more traditional moderate allocation brethren. Almost 64 percent of net assets are invested in equities and about 23 percent are held in corporate bonds and notes with the remaining 13 percent in government agency bonds and short-term obligations.

 

Drilling deeper into the portfolio, the fund sports excellent sector diversification. A little over 16 percent of assets are in health care holdings, including notes issued by benefit managers Aetna (NYSE: AET) and UnitedHealth Group (NYSE: UNH) and common stock in dental supply manufacturer Dentsply International (NSDQ: XRAY) and Teva Pharmaceutical (NSDQ: TEVA), the Israeli manufacturer of generic medications.

 

From there the portfolio is made up the usual blue chip suspects, ranging from 3M Company (NYSE: MMM) and IBM NYSE: IBM) to AT&T (NYSE: T) and Toyota Motor Corp (NYSE: TM). Only a little over five percent of assets are invested in renewable energy names such as First Solar (NSDQ: FSLR) and FuelCell Energy (NSDQ: FCEL).

That all adds up to a steady portfolio and with their sizable position in agency bonds, the overall credit quality of the fixed-income side is excellent. Almost 85 percent of bond holdings are investment grade rated, with a little more than five percent B-rated and the remainder hasn’t been rated. That leaves the fund with an overall single-A credit quality and with most of the bonds and notes coming due within five years, an average intermediate duration of 3.9. So, while there’s little credit risk associated with the fund, when interest rates begin moving up the fund can expect the value of its fixed-income holdings to take a bit of a hit.

 

From a performance perspective, the funds total returns have been a bit lackluster for most of the decade. With the exception of an impressive total return of 63.5 percent in 2003 which pushed the fund into the top one percent of its category, the fund consistently has ranked in the bottom quintile of moderation allocation funds. Ironically, given the funds asset mix, it’s taken a recession to make the fund shine. The fund gave up 25.9 percent in 2008, pushing it into the top third of its category, and so far in 2009 the fund is down a little more than nine percent, ranking it in the top 23 percent.

 

That performance is largely due to the fact that the funds investment strategy has only come into vogue in the past few years. And its style of growth at a reasonable price has certainly been out of favor for almost a decade.

 

It would be tough to find management better suited to this type fund. Sub-advised by Trillium Asset Management, the funds portfolio is managed by a team of three: Adam Seitchik, Eric Becker and Cheryl Smith. Between the three, there are impressive credentials from both investment management and SRI viewpoints.

 

Lead manager Seitchik is currently Trillium’s chief investment officer but prior to that he served as an analyst and portfolio manager of Wellington Management,which has led several Vanguard funds into prominence. He is also a former chief global strategist with Deutsche Asset Management.

 

Before joining Trillium, Becker worked with Cultural Survival, a human rights organization well known for its work with the indigenous peoples of South America. He also sits on the board of Interlock Media, which produces documentaries and radio programming dealing with public health and environmental issues. In addition to her work at Trillium, Smith has also served as vice president and portfolio manager with United States Trust Company.

 

If you’re an environmentally-conscious investor, you’d be hard pressed to find a fund better suited to your purposes. However, if these issues aren’t your issues, you would probably be better served by a more traditional balanced fund. That’s largely due to the fact that with an expense ratio of 1.38 percent and a yield of just under 2.4 percent, it’s easy enough to find better performing moderate allocation funds with comparable yields and lower expense ratios.