A guide to green investing in an uncertain, tail-of-the-bull age

The Outside Portfolio
When the Giant Sequoia Talks, People Listen
A guide to green investing in an uncertain, tail-of-the-bull age
By Nelson D. Schwartz

THE OUTSIDE PORTFOLIO:
When the Giant Sequoia Talks, People Listen
Stocks
Mutual Funds

There’s no harm in admitting it: Wall Street has slipped its silky paws around your soul and squeezed. Oh, sure, you’ve been careful in your dealings with this beast, altruistically nixing those oil-company and timber-giant stocks, maybe even plunking that 401(k) nest egg in a feel-good green mutual fund. And still that 30 percent annual return has
come rolling in. Indeed, thanks to a market that’s been climbing as surely and swiftly as a Sherpa on Mount Tam, most of you have had the unsullied pleasure of checking the stock tables each morning knowing that your net worth has been growing even as you, at least in your own mind, have been saving the world. In the recent market, even good intentions paid off.

But as those mumbling heads on CNBC counsel, the free ride is over. Blame Asia. Or Alan Greenspan. Or your nephew Peabody and all the other amateurs who dove into the trading pits last year, leaving us, at this wonderfully taxing time of the year, wondering if we’ve lingered too long at the tea party. And so the question: Will staying the course hasten an inglorious return to a
Whopper-with-cheese budget? Can we remain in the green by remaining green? Or must we now hop into bed with an Exxon or a Georgia-Pacific, smile wide, and give them a big, wet Marv?

Thankfully, no — in fact, since 1990 the leading index tracking firms that act in environmentally and socially responsible ways has actually outperformed the S&P 500. But at least in part because of this train’s gravy, such investments have surged in popularity. Forty-nine mutual funds currently screen companies for everything from recycling policies to animal
testing, up from just 21 in 1992.

What this means, O ye of little spare time, is that you now have to work harder to find the greens that will reward you most. To help you hack through this financial thicket, we interviewed scores of insiders in four-button Armani suits, ultimately settling on the following list of top-performing stocks and mutual funds for the coming year. Of course, none of these picks is a
sure thing…but heck, since you’ve heard this spiel before, we’ll spare you the usual fine-print disclaimer and simply cut to the chase.

Illustration by Jason Schneider