By Brian Stoffel | More Articles

September 12, 2011 | Comments (2)

History hasn’t always been kind to investors who try to earn profits while keeping their consciences clear. Companies need to stay solvent, and no matter how much good a company does, it won’t survive in the marketplace if it doesn’t make a profit. Many in the business community are rightfully skeptical of purpose over profits mantra.

Don’t tell that to our top Rising Star

Though we’re only 10 months into our inaugural year of Rising Star investing, a clear winner has emerged; Alyce Lomax, and her brand of socially responsible investing, is outperforming the S&P index by 16.5 percentage points and is almost 10 percentage points above her nearest competitor.

We here at the Fool encourage investing with a minimum three- to five-year timeline, so Alyce isn’t doing backflips of joy yet. But because of her unique approach to investing, I sat down for an interview with her to talk about her portfolio.

Investing responsibly, with a twist

To me, SRI means investing in companies that make a positive impact in our world — whether through their products or their practices, Alyce says. Initially, she was also preparing herself for the kind of market-lagging performance that others before her had experienced. But in the process of molding her own portfolio, she realized a key difference between what she was doing and what others have done before.

• Traditionally, SRI funds start with the whole universe of stocks available to them. Then, they screen out vice industries like liquor, cigarettes, or oil. Essentially, these funds look to eliminate to mold their portfolios.
• I, on the other hand, started with no stocks, and got to be far more selective in what I was looking for. Alyce searched for opportunities that were the best of the best, both from a standard investing and an SRI point of view.

Though it might seem like a small distinction on the surface, Alyce’s record shows that it has made a world of difference.

A diversity of choices

A quick look at some of Alyce’s holdings shows that an SRI portfolio can be just as diverse as others, with sectors like consumer goods, consumer discretionary, industrial goods, and energy all included. If you click on the last column, you’ll have full access to Alyce’s reasoning behind these picks.