'Saintly' Investing Protects for Long Haul
BOSTON ( TheStreet) -- Sitting at a poker table with a cigarette and a stiff drink sounds like a good plan if the world is ending. Given the turmoil of 2011, it's no surprise that the Vice Fund (VICEX) has wildly outperformed the market.
On the other hand, investors who stick with a socially responsible (SRI) value approach like the Appleseed Fund (APPLX) have beaten the market by a wider margin over the years.
The Vice Fund, which counts Philip Morris (PM), Anheuser-Busch InBev (BUD) and Wynn Macau among its holdings, is up more than 14% this year through June 30, compared to a 6% return on the S&P 500 and the Appleseed Fund during that same time frame.
"The Vice Fund is doing quite well this year," Josh Strauss, portfolio manager of the Appleseed Fund says. "Its performance is very good. Their outperformance is all gambling and tobacco. But it's obviously a different category. Whether the Vice Fund can provide value in a portfolio, it certainly would have low correlation to the SRI fund, that's for sure."The Vice Fund has an average annualized return of 3.9% over the past three years, greater than a 3.3% increase on the S&P 500 but well below the 14.7% return of the Appleseed Fund. That strong performance earned Appleseed the Morningstar accolade of top-performing mutual fund across every asset class during the 2008 and 2009 span. The Appleseed Fund has the socially responsible mandate to exclude the so-called sin stocks -- alcohol, tobacco, gambling and porn. Strauss also excludes "too big to fail" banks, due to the view that the banks "have been managed in an irresponsible way with huge leverage," Strauss says. >>'Sin' Stocks Help Investors Escape Slump This socially responsible mandate helps the fund limit business risk. For example, stocks excluded from SRI funds, like Philip Morris, face massive litigation risks and even increased taxes by the government. With all of the uncertainty in the market because of the downgrade of U.S. debt by Standard & Poor's, weak economic data and continued debt woes in Europe, this defensive approach has held up thanks a portfolio filled with companies in health care and consumer staples.
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