« Valuation Schmaluation | Main | What happens to your hit-count when Atrios links to your site »

Stupid Investment Idea of the Year: Socially Irresponsible Mutual Fund

Hilarious. While "socially responsible" mutual funds have been enjoying good investment performance of late, and corporations are beginning to understand that social and environmental responsibility enhances long-term shareholder value, an intentionally socially irresponsible fund is in the dumpster of investment performance:

The May 2006 Institutional Investor reports:

Right-wing fund managers Steve Milloy and Tom Borelli are grabbing lots of attention for accusing companies of devoting resources to pet causes instead of maximizing profits. Last month they showed up at Goldman Sachs' annual meeting in New York to attack CEO Hank Paulson for, among other things, chairing the Nature Conservancy and authorizing Goldman's donation of land it owned in Chile to the Wildlife Conservation Society. But a look at the returns of the pair's grandly named Free Enterprise Action Fund suggests that their own bottom line could use some help. The $5.6 million fund gained just 2.32 percent from March 1, 2005, its first day in business, through the end of the year, net of expenses. That's well below the S&P 500's 4.72 percent gain during the same period -- and it doesn't hold a candle to the 18 percent appreciation of Goldman shares.

Sure enough, the partners hold their own venture to different standards. Their returns, they say, don't matter as much as their stated cause: counteracting the influence of so-called socially responsible investment firms, like Domini Social Investments and Calvert, on corporate behavior.

"We're not trying to be a high-performing mutual fund," Milloy, 47, tells Institutional Investor. "We are imitating the left. Left-wing social-political activists don't like capitalism. They hide behind human rights. We want to help oppose that."

The pair have plenty of experience standing up for corporate America's right to ignore do-gooders. In his spare time Milloy publishes JunkScience.com, a Web site devoted to debunking global warming as a "myth." He formerly ran the Free Enterprise Action Institute, which was funded in part by ExxonMobil. Borelli previously worked as a lobbyist for food and tobacco giant Altria Group. . . .

I'm sure these self-professed champions of capitalism will attract a lot of investors with a fund philosophy like "We're not trying to perform well." Yeah, great idea. The free market's gonna eat that right up.

Li'l Update: Atrios helpfully links to some more eyebrow-raising content on this, um, investment vehicle from Tim Lambert (scroll way way down on this last link).


Another fine example of the delusional traits of the right-wing mindset. One hopes that evolution would take care of this sort of nonsense.

They hide behind human rights. We want to help oppose that.

Do they ever think about the things they say or just spout whatever pops into their tiny minds?

This left-leaning entrepreneur likes capitalism just fine. It's the stupid capitalists that are worthy of scorn.

But these two dolts and their investors serve some purpose. If some of us are going to beat the market, there have to be some looooooooosers.

One would hope that, but unfortunately the fools appear to be breeding faster than we are, thus leading to an actual devolution in the species....

Does "breach of fiduciary duty" mean anything any more? If these people are fund managers, they have a fiduciary duty to investors, unless they advise in their prospectus that they do not intend to act responsibly.

Someone please explain to me how a deliberately under-performing investment fund is supposed to give a shot in the arm to unbridled capitalism?

When my son's 8th grade class did their finance unit the teacher put them in groups to (theoretically) invest in various companies. The winning group got to go to lunch at a fancy downtown restaurant.

Two boys chose to invest in three things: tobacco, alcohol and guns. Guess who got the free lunch?

So, yeah, socially concious investing is a choice one makes deliberately. I work with my broker to avoid companies or funds that make me uncomfortable.

I've always loved this story tho, because she was a bad teacher, and she made no secret of the fact that she disliked these boys - it was a touch of justice that she had to buy them lunch.

hey, don't leave me hanging, who got the free lunch?
i have a math trophy at home, but
i have never ever balanced my check book. it makes my head hurt to think about.

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)