US Videos

Price, Performance Separate These Socially Responsible Funds

David Kathman, CFA, Ph.D.

David Kathman: Domini Impact Equity and TIAA-CREF Social Choice Equity are both socially responsible mutual funds that do a really good job of owning companies scoring well on a variety of environmental, social, and governance, or ESG, issues. 

Both of them earn Morningstar Sustainability Ratings of High, and they have sustainability scores in the top 5% of the large-blend category--which is a good thing for investors who want to invest in a sustainable, socially conscious way. 

One way these two funds differ is in their performance. Over the past 10 years the Domini fund has trailed about three quarters of the large-blend category, while the TIAA-CREF fund has done quite a bit better, beating about two thirds of the category. Even more importantly, the TIAA-CREF fund is significantly cheaper, with a 0.46% expense ratio for retail shares, as opposed to the Domini fund's 1.14%--more than twice as much. That's a major reason why the TIAA-CREF fund has a Morningstar Analyst Rating of Bronze, while the Domini fund is only rated Neutral.