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Fund Times: Wellington to Manage Large SRI Fund

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The first and largest socially responsible index fund is going active and raising its expenses. Domini Social Investments LLC, which launched the first socially responsible index fund in 1991, today filed documents with the SEC to seek shareholder approval for bringing Wellington Management on board as subadvisor to their popular ($1.2 billion)  Domini Social Equity  (DSEFX). The fund will no longer track the Domini 400 Social Index, but will instead be actively managed by Wellington using quantitative methods. As a result, the expense ratio of the Investor shares will go up to 1.15% (versus 0.95% currently, and the R shares will go up to 0.85% (versus 0.62% currently).

Wellington has been subadvising the new Domini European Social Equity  (DEUFX), since it launched late last year. While Wellington's performance with the European Social Equity fund has been promising, this fund has not been open long enough to evaluate. Nevertheless, we have a good deal of respect for the research process and capabilities at Wellington, and we remain hopeful that the firm can turn the lagging Social Equity fund's performance around. The fund's three-year total return through May 24, 2006, lands it in the large-blend category's bottom quartile, clearly a disappointment to investors and advisor alike.

Lawrence Jones does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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