Haas School graduate students keenly interested in social responsibility and finance now have the unique opportunity to blend the two fields through a new student-managed investment fund.
In fall 2007, the first team of Berkeley MBA and Master's of Financial Engineering students began managing the new Haas Socially Responsible Investment (HSRI) Fund. The investment philosophy for the fund, which began trading this past May, is to achieve a balance between financial and social and environmental performance.
"To our knowledge this is the first socially responsible investment fund at a leading US business school," says Kellie McElhaney, adjunct professor and executive director of the Haas School's Center for Responsible Business. "We expect this experience to train students for careers in both traditional investing as well as socially responsible investing. We also hope that our students will take their new-found skills to traditional Wall Street firms and raise awareness about social responsibility issues from inside the companies."
New Social Investing Course
To gain some theoretical footing in this kind of investing, students managing the fund are required to enroll in an elective on socially responsible investing techniques, also offered by Haas for the first time in fall 2007.
A group of students will be chosen by a special committee each year to make investment decisions for the HSRI Fund's portfolio, taking on fund manager and portfolio analyst roles. The number of students who participate is expected to increase from five to ten as the fund grows.
The students determine detailed socially responsible investment criteria, with a focus on companies using sustainability principles as a core part of their business strategies, practices and investments. An investment advisory committee and Haas School faculty advisory committee provides guidance to the students.
In addition to the learning opportunities this fund provides, the center expects that the investment data to be gathered by the fund will help advance the methodology and the understanding of how well socially responsible investment funds can perform.
Students on the first team had a wide variety of backgrounds, from nonprofit experience in Africa to working in the stock market.
HSRI Fund team member Mike Pearce, MBA 08, brought six years of experience working in investment banking at UBS in New York and London to the fund. He came to Haas with an interest in socially responsible investing and then worked over his first summer in the program for Pacific Community Ventures, a private equity firm with a social mission.
"I saw how social investing could have a powerful impact on communities," says Pearce. "I wanted to do something similar in my career – investing that includes a meaningful social component."
He saw the HSRI Fund as a way to broaden his experience with hands-on work in the public stock markets. "Not only did we get to apply theory to practice, but the more we had done in school working in the real world, the better prepared we were for our post-MBA careers," says Pearce, now an investment consultant with Cambridge Associates, which provides investment consulting advice primarily to nonprofit institutions, as well as to select private clients.
Seeding the Fund
The fund came about thanks to generous gifts from Haas alumnus Charlie Michael, BS 78; his wife, Doris; and Haas alumnus Al Johnson, BS 62 and MBA 69; and his wife, Marguerite. Michaels, who donated $250,000 to start the fund, serves as the president of Sierra Global Management, an investment management firm in New York City.
McElhaney and the Michaels came up with the idea for the HSRI Fund at the Social Performance Metrics Conference, an event on metrics for corporate social responsibility that was held at Haas in April 2005.
"Doris and I were most gratified to seed the HSRI Fund, as it gives students a chance to apply their understanding of corporate social responsibility to real investment decisions," Charlie Michaels says. "The fund, and hence Haas, will also capitalize on the attractive returns coming from investments in companies that are socially responsible and have strong financial characteristics."
The Johnsons provided $1 million to enable the HSRI Fund to begin trading. Al Johnson is a former member of the Business School Campaign Executive Committee, is involved with the North California Leadership Gifts Committee, served six years on the Library Advisory Board, and is currently a trustee on the UCB Foundation. Marguerite Johnson, who earned a bachelor's degree in social welfare in 1960, is a longtime member of the School of Social Welfare Community Partnership Board.
"The Haas Socially Responsible Investment Fund struck me as a very interesting approach to investing because it's not just about the bottom line," says Al Johnson, a general partner with WTI Ventures in Menlo Park, Calif. "The fund also looks at companies' social responsibility in addition to financial characteristics. In many respects, the fund combines Marguerite's passion for social welfare and my passion for business."
Haas School Dean Tom Campbell says: "We are tremendously grateful to the Michaels and the Johnsons for giving our school this opportunity to do something innovative that adds to our students' experience with investing for both social and financial value."