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GreenMoney Journal - publishing since 1992
Fall 2010 issue
Socially Responsible Investing – Better Companies, Better Communities
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Community Investment Fund Enhances Portfolio Returns And Communities - a profile of the CRA Fund
Dan Weinbach, and Alyssa Greenspan
The realm of community investing has changed forever thanks to new investment options that have
been introduced in recent years. No longer is "community investing" synonymous with grants and
donations or below-market loans. The most notable of this new breed is the CRA Qualified Investment
Fund (CRAIX), which is the largest community development mutual fund in the nation. The Fund has
achieved its position by breaking the mold, providing measurable social impact as well as
competitive financial returns.
As a testament to its performance success, Lipper, one of
the leading mutual fund research companies in the nation, recently recognized the CRA Qualified
Investment Fund as a "Lipper Leader," representing the top 20% of its class for both Total Return
and Consistent Return. In addition, the Fund twice topped The Wall Street Journal's "Mutual Fund
Scorecard" as the top-performing fund in the U.S. Mortgage Funds category.
"Those of us
involved in community development investing have often insisted - preached even - that community
investing does not require sacrificing credit quality, liquidity, or financial performance," says
Barbara VanScoy, the Fund's portfolio manager and a principal of CRAFund Advisors, registered
investment advisor to the Fund. "It's validating when an objective ranking system like Lipper shows
the empirical data that backs up our claims."
The CRA Qualified Investment Fund utilizes a
disciplined, positive screening approach, where all of its underlying securities have community
development as the primary purpose. The proceeds from these fixed-income securities, which include
taxable municipal bonds, targeted mortgage-backed securities and asset-backed securities, finance
such community development endeavors as housing for low- to moderate-income individuals and
families; affordable healthcare; job training, employment services and job creation programs;
down-payment assistance and statewide home ownership programs; and neighborhood revitalization.
Since its inception in August 1999, the Fund has purchased nearly $900 million worth of
community investment securities in all 50 U.S. states, as well as in Puerto Rico and the U.S.
Virgin Islands. And the proceeds of these bonds have had a dramatic, quantifiable effect: 67,111
affordable rental housing units; 2,446 home mortgages for low- and moderate-income families; 1,285
affordable healthcare beds; $61.7 million in community development activities; and $107.7 million
in down-payment assistance and statewide home ownership programs.1
Direct Impact
Investment Approach First Applied To Banks
The Fund's Advisor coined the term
"direct impact investing" to describe the investment approach it utilizes in managing the CRA
Qualified Investment Fund. The term takes its name from the two ways it affects a group of
beneficiaries: 1) proactively making a direct impact through the securities it purchases, and 2) by
investing in securities that directly impact a specific geographic region or directly advance a
social mission.
Putting this approach to work, the Fund has quietly grown into the largest
fixed income community development investment vehicle in the nation, with nearly $500 million in
assets. This distinction comes after a half decade of controlled growth, carefully building a
roster of shareholders that include some of the largest banking institutions in the nation.
Banks and savings & loans have used the mutual fund as an investment tool to simultaneously
meet their financial goals while satisfying government regulations that require financial
institutions to invest in community development activities.
"We have a demanding
shareholder base," says VanScoy. "Not only do these banks have a fiduciary responsibility to invest
in financially competitive products, but they have to show regulators that their investment in our
Fund is making a quantifiable, positive, community development impact."
Case
History: York County Brownfield Redevelopment
A bond that helped finance the
redevelopment of an abandoned industrial property in York County, Pa. typifies the kinds of
investments that comprise the CRA Qualified Investment Fund.
From the look of it now, few
would believe the Industrial Plaza of York was once a community eyesore. However, using proceeds
from a bond issue purchased by the Fund, the brownfield, a once-abandoned industrial property in
need of environmental cleanup, has been transformed into a thriving commercial complex.
"We saw the York County redevelopment bond as a 'trifecta.' This program stimulates the local
economy, advances environmentally friendly development, and helps encourage minority and
women-owned business," said Alyssa Greenspan, CFA, a director at CRAFund Advisors.
The
once blighted parcel that now makes up the Industrial Plaza of York houses 181,000 square feet of
revitalized commercial space, including the William C. Goodridge Business Resource Center, a new
business incubator for minority- and women-owned businesses. "We proactively seek the opportunity
to finance projects that provide low-income families with more than basic needs. Here, we're
supporting 'the seeds' for a much brighter future," said Greenspan.
In addition, the site
hosts Buchart-Horn/BASCO Associates, the architectural/engineering firm that designed the
development. The firm's visionary work earned them the national Phoenix Award for brownfield
redevelopment. In addition to awards, the project generated nearly 500 local jobs with an annual
payroll of $12.1 million and an estimated $34.6 million in economic development benefit to the York
region.
The bond also directed capital to the County of York Technology Center (CYTEC), a
40,000 square foot multi-tenant building located on an eleven-acre parcel in the York City Business
& Industry Park. This redeveloped property includes a small business incubator housing 14 start-up
industrial establishments, further solidifying the economic future for the region.
Individual Investors To Access Fund's Benefits
Until recently, the
Fund has maintained a high investment minimum; however, recognizing the appetite for community
investments among the general market, the Advisor has begun to roll out a variety of distribution
options for individual investors and their financial advisors who wish to take advantage of CRAFund
Advisors' direct impact investment approach.
For these investors, smaller share purchases
can be made through several avenues including trust departments of participating banks,
distribution agreements with National Advisors Trust and Foliofn, and availability on the Charles
Schwab OneSource Mutual Fund Platform. Investors can also speak to their financial advisors, who
are encouraged to explore opportunities with the Advisor.
In addition, CRAFund Advisors
offers separate account management for accounts in excess of $25 million.
For more
information about CRAFund Advisors or the CRA Qualified Investment Fund, visit
http://www.crafund.com
call 877-CRA-1977, or email Alyssa Greenspan at agreenspan@crafund.com
1 - As of June 30, 2004
As of 6/30/04, performance for the 1-year, 3-year and since inception periods (inception
date August 30, 1999) is -1.44%, 5.83%, and 6.19%, respectively. Past performance does not
guarantee future results. Performance reflects fee waivers and expense limitations in effect. In
their absence performance would be reduced. Current performance may be lower or higher than the
performance data quoted. To obtain the most recent month-end standardized performance, call
1-877-CRA-1977. An investment in the Fund is not a deposit or obligation of, or insured or
guaranteed by, any entity or person, including the U.S. Government and the FDIC. The Fund will
invest only in securities having a rating in the 3 highest categories (AAA, AA, A) as assigned by a
nationally recognized statistical rating organization such as Standard & Poor's Rating Group and/or
Moody's Investors Services, or deemed by the Advisor to be of comparable quality to securities so
rated, or which are credit-enhanced by one or more entities with one or the above credit ratings.
For a free copy of the Prospectus, and for a complete discussion of investment objectives, risks,
charges and expenses, please call Schwab's Mutual Fund OneSource (R) at 1-800-435-4000 or CRAFund
Advisors at 1-877-CRA-1977. The Prospectus contains this and other information about the Fund and
should be read carefully before investing. The investment return and principal value of an
investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Holdings subject to change. The Fund is a no load fund distributed by
Citco Mutual Fund Distributors, Inc. (Member NASD).
Lipper Leaders for the 3 year period
ending June 30, 2004): Consistent Return ratings reflect funds' historical risk-adjusted returns,
adjusted for volatility, relative to peers. The ratings are subject to change every month and are
based on an equal-weighted average of percentile rankings over the 3-, 5- and 10-year periods (if
applicable). Twenty percent of funds in each peer group are named Lipper Leaders, the next 20%
receive a score of 2, the middle 20% are scored 3, the next 20% are scored 4, and the lowest 20%
are scored 5. Total Return ratings reflect funds' historical total return performance relative to
peers. The ratings are subject to change every month and are based on an equal-weighted average of
percentile rankings over the 3-, 5- and 10-year periods (if applicable). Twenty percent of funds in
each peer group are named Lipper Leaders, the next 20% receive a score of 2, the middle 20% are
scored 3, the next 20% are scored 4, and the lowest 20% are scored 5. Lipper ratings are not
intended to predict future results, and Lipper does not guarantee the accuracy of this information.
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