Harvard Picks Parnassus for Social Choice Fund

Harvard will invest its soon-to-be-launched social choice fund into the Parnassus Equity Income Fund, the University announced in a press release on Thursday.

According to the press release, Parnassus was selected using a number of “investment and social criteria” for the fund, which will be officially created when Harvard’s new fiscal year begins on July 1.

The University announced the creation of the social choice fund in December after receiving pressure from students and alumni who advocated for socially responsible investing.

The December announcement also came after similar decisions made by other institutions, such as Brown University, which became the first Ivy League institution to create a social choice fund in 2007.

In its December press release, Harvard said that the fund would be invested in an outside mutual fund, but not by the Harvard Management Company, which oversees the University’s $30 billion endowment.

The Corporation Committee on Shareholder Responsibility—a subcommittee of the University’s highest governing body—decided on Parnassus with the help of HMC.

The press release said that HMC hired two undergraduates to help research and analyze various mutual funds to help the Company make a recommendation to the Corporation.

The Parnassus Equity Income Fund, a mutual fund operated by Parnassus Investments, is comprised of 75 percent dividend-paying equities and 25 percent non-dividend-paying equities.

“The Fund also takes environmental, social, and governance factors into account in making investment decisions,” according to the Parnassus website.

Responsible investing advocates said at the time of social fund’s announcement that they were pleased that Harvard was taking action, but that they hoped the social choice investments would be transparent.

Activists also added that they were pleased that there would be no minimum gift amount for the fund, but expressed concern that a large chunk of its initial value—20 percent—would be removed each year to pay for financial aid.

“This fund will offer donors another way to support Harvard’s financial aid program and the transformational opportunities it offers our students,” University President Drew G. Faust said in a December press release.

—Staff writer Samuel Y. Weinstock can be reached at sweinstock@college.harvard.edu. Follow him @syweinstock.