Management Overview - R3 Funds
Essay by nikky • August 11, 2011 • Essay • 315 Words (2 Pages) • 1,818 Views
Introduction
1.1 Overview
R3 Fund is mutual funds that are invested in environmental conscience firm which adopted the R3 philosophy - Reuse, Reduce and Recycle. The main objective of the R3 fund is to seek capital growth and income, maximize and achieve long term total return when invested in a diversified portfolio (Green Century Funds, 2010). Definitely the fund itself will carry the risk when invested in the stock market. But the risk is being minimized through the stringent environmental and social criteria for companies, and the criteria are as such (Barhir, 2009):
* High Paying dividend, where it reflects a company which in the future will have a lot of potential growth and also signify that the company is keen in evaluating opportunities to use earnings as a way to provide the greatest benefits to the investors. Example of these company which gave out high dividend to its investors are, Solarparc AG (SLX: Frankfurt) & Hyflux (HYFLOL.SI.).
* Higher current ratio means that the company will have the ability to pay current debt out of its own current asset, and will act as a better "cushion" in bad times.
* Relatively low debt to capital ratio symbolize how the company finance its operation, and how much of its capital came from debts or loan compared to other sources of capital, such as preferred stock, common stock, and retained earning (Brown & Reilly, 2009).
* No investments in companies with the following industries: alcohol, tobacco, nuclear power and plant, gambling, firearms, or military weapons.
* Companies that provide quality products and are already past the initial R&D phase and generating sales with long-term contracts secured. Therefore look at performance, not just potential, to lower risk and increase probability of success.
* Trends and consumer feedback.
* Level of debt in a company. Check footnotes in financial statements. Especially during recessionary times, a good company that is highly leveraged may not be able to meet debt payments and obtain additional financing.
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