Naughty and Nice Funds, From Best to Worst
This week's sector-fund analysis marks the third annual winter holiday tradition of looking at the best- and worst-performing socially responsible funds. This year we expanded the list to include a few of the less fortunate sectors without a sufficient number of funds to warrant regular coverage.
By including the food and beverage, gaming and entertainment, health and biotechnology, and leisure industries, we highlight the 10 best- and worst-performing naughty & nice funds. Socially responsible, religiously responsible and Islamic fund categories return from last year. Environmentally responsible funds have been excluded, as they are now regularly covered within the energy group.
The worst-performing fund on our naughty & nice list is the Ave Maria Opportunity Fund (AVESX), which declined 6.45% for the five trading days ending Wednesday, Dec. 24. The fund selects companies believed to be consistent with the core values of the Roman Catholic Church. The largest holding is SPDR Gold Trust (GLD), at 4.65% of assets. Oil and gas drillers Nabors Industries (NBR), down 20.09%, and Atwood Oceanics (ATW), down 19.33%, led the decliners.
One of three socially responsible funds from the same family on today's list, The Parnassus Fund (PARNX), dropped 6.39% for the week. The fund's contrarian strategy targets out-of-favor companies.Parnassus' holdings of homebuilders DR Horton (DHI), off 19.64%; Pulte Homes (PHM), down 13.20%; and Toll Brothers, off 12.09%; certainly fit the bill. Another position, Whole Foods Markets (WFMI), a leader in organic food retailing, gave back 17.96% on difficulties related to Federal Trade Commission integration blockages of its August 2007 purchase of Wild Oats. The only naughty fund to make the worst-performing list this week is the Consumer Discretionary Select Sector SPDR Fund (XLY), whose tracked index has automobiles, clothes, media, hotel and other leisure industry stocks. Share losses of 32.80% at Ford (F) exceeded the 25.63% drop for the week at General Motors (GM), even though Ford opted out of the Bush administration's delayed-bankruptcy plan amounting to $13.4 billion for GM and Chrysler. In another extraordinary move last week, the Federal Reserve used emergency powers to convert GMAC to a bank holding company. This move requires Cerberus and GM to liquidate most of their controlling interest in the finance company but frees up funds for dealership and customer car purchases.
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