Those who argue for diverting pension investing from its traditional goal to such other goals as equal employment opportunity, occupational safety and health, consumer protection, environmental protection, energy conservation, human rights, inner city redevelopment and low income housing, have termed their proposals “socially responsible” investing. The author prefers the term “divergent” investing, which avoids the implication that objections to such proposals are necessarily antisocial and irresponsible.

A Wisconsin law mandating that at least 70 per cent of the State Teachers Retirement Fund be invested within Wisconsin was repealed in 1945—possibly because of the performance history of the resulting portfolio. But divergent investing is likely to be tried again and again until the lesson is overwhelmingly clear: The pension fund that diverges from exclusive concentration on performance performs less well than one that doesn’t.

Who decides what the goals and priorities of a divergent portfolio should be? If a construction union invests in mortgages to finance a construction project on which its members will have jobs, who will choose the projects? If state and local pension funds are used to finance local projects, won’t politics replace market returns as the investment criterion? When a pension fund engages in divergent investing, the special interests with the most muscle are likely to choose both the divergent goals and the specific investments.

Because divergent investing interferes with investment performance, it interferes with retirement security. Until retirement benefits are adequate, divergent investing is an unconscious—or, if conscious, a contemptible—effort to take money away from the elderly, who themselves need financial aid as much or more than any other group in our society.