Charles Schwab is a full-service, online investment company. I find the breadth and complexity of tools available to me as an account holder to be very good. Through their Advanced Mutual Fund Screener, I was able to select Socially Conscious from their Special Criteria menu. This broad search resulted in a list of 53 funds. I would categorize this as a large number of funds to choose from at Charles Schwab. I wasn't able to find any information online that indicated how a fund was defined as being socially conscious. A quick review of the names of the funds provided a good indication of the intentions of individual mutual funds, but a name is just that. Interestingly I found that their were two funds with titles related to religious affiliation, AVEMX Ave Maria Catholic Values and IMANX Dow Jones Islamic Index K. Mennonite Mutual Aid had several different socially conscious mutual funds. I will discuss this family of funds after further review of the list.

Of the 53 funds considered socially conscious, one, PTSAX, was listed as being a 5-star rated fund by Morningstar , eleven funds were rated 4-star, and 11 rated 3-star. Morningstar ratings are important to me for the simple reason that they have done their homework and have provided a scale by which I can judge a mutual fund. The more stars, five being the highest, the better the fund is managing performance, risk and a host of other factors. This rating scale has not always been robust, but that changed in 2004 and consumers of their information have benefited. Morningstar is a company of experts that research investment options (stocks, mutual funds, ETF, etc.) and make judgements about them. The rating system is a tool that makes a judgement about how well a stock or mutual has done to date. Charles Schwab most likely pays for a subscription from Morningstar so that I can get information about my investment choices within the Schwab web site.

Along with providing the Morningstar rating for mutual funds and stocks, Charles Schwab provides it's own mutual fund rating. Mutual Funds can be considered to be on Charles Schwab's Select List based on their own proprietary research that parallels Morningstar's. Only one socially conscious fund, PAXWX, made the Select List. My experience has been that mutual funds from the Select List can perform very well, especially when coupled with a 4- or 5-star rating from Morningstar. Rob has stated that he is not as concerned with performance of the mutual fund (in comparison to non-S.C.I. funds) due to how early he has started his investing. He feels that over the life of having his Roth, that a socially conscious fund can meet his retirement needs along with his political, environmental and social ideals.

My partner, Susan, has recently started her Roth IRA and shares similar goals. The other day she and I defined her socially conscious screening criteria so that we could find mutual funds to compare. I utilized a list of socially conscious mutual funds compiled by Social Investment Forum. Susan and I went through the different types of Screening and Advocacy categories that funds use to make their decisions about the companies they invest in and narrowed Susan's choices. She found that the screening and advocacy used by Calvert funds in investment criteria, with the exception of alcohol, best defined her ideals. Susan won't mind if the company that her mutual fund invests in is somehow related to alcohol as long as the rest of the criteria are met. I culled through the list of funds that Social Investment Forum provided and found six fund families that had mutual funds the matched Susan's criteria. By definition Calvert was one family and that was followed by Mennonite Mutual Aid, Neuberger Berman, Parnassus, and Walden Asset Management. Susan has her Roth IRA with Fidelity Investments and I have not reviewed her options with them yet. I found that Calvert funds are unavailable to new investors through Charles Schwab. However, the rest of the funds that match Susan's criteria are available through Schwab.

I looked at five mutual funds from these families: MVIAX, NBRSX, PARNX, PARSX, WSFEX. None are on Schwab's Select List. The Morningstar rankings are:

• MVIAX 2-star
• NBRSX 4-star
• PARNX 2-star
• PARSX no rating
• WSFEX 2-star

There are more than five mutual funds from all of these fund families and I chose the funds above based on the title of the funds.

The good news from my review is that Charles Schwab has socially conscious funds to research and compare. There are also a handful of highly ranked funds. The challenge in my opinion is finding a funds that are performing relatively well and allow for diversification within a Roth portfolio. Diversification within a portfolio is essentially the practice of holding mutual funds and stocks that are significantly different from each other. Their difference can be based on being from different industries and that the companies that are held in the portfolio have different capitalizations. Capitalization can simply be referred to how much it would cost a to buy all of the stocks of a company. It is best to have a mix of large, medium and small capital companies in your portfolio. Most mutual funds will target one type of capitalization, though there are funds that mix capitalizations, called blended funds, in their investments in order to diversify for you. Blended funds can be useful, but a Roth IRA with similar blends is not truly diversified unless each fund is significantly different. A portfolio that is diversified is at less risk to decrease in value based on significant changes within sectors of the the financial markets.