'Socially irresponsible' fund pitches to investors By James Paton
NEW YORK, Aug 15 (Reuters) - Texas stock picker Dan Ahrens says he and his colleagues aren't money-hungry hedonists who are indifferent to social causes.
Ahrens is considering donating to charity a portion of the fees he earns from selling a new mutual fund.
"Even our prospectus mailed to shareholders is printed on recycled paper," he added.
When it comes to selecting stocks, however, he isn't too worried about sin.
His small Dallas firm, Mutuals.com, just rolled out a portfolio, the Vice Fund, which will target alcohol, gambling, tobacco and defense stocks shunned by some portfolios.
The fund plans to invest in companies such as Philip Morris (NYSE:MO - News), the maligned maker of Marlboro cigarettes, Anheuser-Busch (NYSE:BUD - News), the purveyor of Budweiser beer, and Harrah's Entertainment (NYSE:HET - News), the Las Vegas casino operator.
The portfolio opened for business on Thursday.
A growing number of funds avoid investing in companies they believe have harmful social or environmental effects. Domini Social Investments, manager of the Domini Social Equity Fund, is one of the highest-profile of such firms.
"A lot of these socially responsible funds mirror the S&P (500 Index), but they exclude these particular stocks, and these particular stocks perform really well when the market goes up, goes down, whether we go to war, or don't go to war," Ahrens said. "People keep smoking, drinking and gambling."
Shares of Philip Morris have risen 5.5 percent this year, despite the legal and social assault on the tobacco industry. Anheuser-Busch stock, meanwhile, is up 18 percent.
At the same time, the benchmark S&P 500 has fallen about 20 percent in 2002 amid a sluggish economy, weak profits and worries about corporate accounting.
The new fund, Ahrens hopes, will appeal to investors seeking more stable stocks.
But the odds of a small niche fund surviving in this environment are slim.
Attracting money from investors these days, after a long and sharp stock market slide, is painfully difficult even for big, well-established money management companies. For smaller players like Ahrens, it's significantly tougher.
Plus, it is reasonable to expect that funds that fall in the socially responsible camp will draw investors who are fed up with accounting shenanigans and other questionable corporate activities.
Still, Ahrens believes investors who want to make a positive difference can do so in other ways.
"Personally, I think people should donate their time, donate money to charity," Ahrens said. "But I don't think they should vote with their investments. I think they should invest to make money, not to make a political statement."
These commercials are superfine because they pay for the production costs of putting CHRIS MOTHERFUCKING BENOIT on my GODDAMN TV SCREEN! I will GO GREYHOUND! I am thinking OUTSIDE THE BUN! – Dean Rasmussen 8/1/2002 Smackdown Workrate Report
This sounds pretty good to me. Smokes, casinos, and defense companies look pretty good for the times we are in. I just wish I had the front money to dump into stocks. I don't know why so many of those funds avoid these companies that do so well. the whole point of investing is to make money. but the article makes it sound like his fund doesn't have a chance of making it and drawing enough investors. too bad :(
I tend to agree with spf--I see Evan Bayh as the most likely running mate for Clinton if she gets the nomination. Obama/Richardson is certainly a possibilty, although my guess would be Joe Biden if it's Obama.