Virtue Beats Vice on Wall Street

New York Times Story Gets It Wrong

By Warren Cole Smith

According to the "New York Times," vice is a virtue - at least when it comes to the stock market.

A Sept. 14, 2007, "New York Times" article titled "At Least on Wall Street, Wages of Sin Beat Those of Virtue" said the Dallas-based Vice Fund, which targets only "sin" stocks such as those involved in gambling, alcohol, and tobacco, has outperformed the S&P 500 over the five years of its existence.

But Rusty Leonard, of Stewardship Partners, believes the "New York Times" got it wrong. His Global Concentrated BRI Equity portfolio did even better than the Vice Fund. Leonard picks stocks for his portfolio after screening out many of the companies that the Vice Fund focuses on. Leonard also eliminates companies involved in pornography, homosexuality, abortion, and other activities Christians consider immoral. It's an increasingly common approach called "Biblically Responsible Investing," or BRI.

"The Vice Fund has done well," Leonard said. "But our Global Concentrated BRI Equity portfolio has done quite a bit better. Our results indicate that there may be no need to sacrifice your heartfelt values, or worse yet, actually embrace sin, in the pursuit of attractive returns."

Specifically, from Sept. 30, 2002, thru Sept. 30, 2007, the Vice Fund rose 160.2 percent. However, Stewardship Partners' Global Concentrated BRI equity portfolio trounced the Vice Fund's returns by rising 226.3 percent over the same time period. Both funds can invest globally using American Depository Receipts.

"For many years, conventional wisdom has held that you had to sacrifice returns if you invested according to your Christian values," Leonard said. "Unfortunately, the New York Times reporter, Janet Morrissey, succumbed to this myth. Not only is it possible to 'do well by doing good,' we believe it is a common-sense method to achieve good performance over the long term. Christians understand and history often confirms that bad behavior has a way of catching up with both people and companies."

In fact, according to the "Times" story, the Vice Fund's management company itself has had its share of ethical troubles. The fund's founder, Richard A. Sapio, was accused of fraud in 2003 and 2004. The cases are still pending. Sapio and other executives associated with the cases have since left Mutual Capital Alliance, which owns the Vice Fund.

"Christians believe that we are not owners, but stewards, of God's resources," Leonard said. "To be the best possible stewards, we diligently work to obtain high returns on the wealth the Lord has entrusted to our care. That's a goal we share with all investors, even those invested in the Vice Fund."

Leonard says that where he differs from the Vice Fund is that he wants "to earn those returns in a manner that honors our Lord and is a blessing to our fellow man. It has been exciting to be able to accomplish both goals in the past, although investors should be aware that there can be no assurance that we will be able to repeat this good performance in the future."

Stewardship Partners is just one organization Leonard has founded to help Christians be good stewards of their money. MinistryWatch.com is a web-site with profiles - including detailed financial statements - of the 500 largest Christian ministries in the country.

"We also hope that the abundance we seek to create for our clients will position them to be wise and effective donors to the Lord's work, as well," Leonard said. "MinistryWatch.com helps educate and empower donors to be the best givers they can be, which is another important part of the stewardship process. We desire not only to bless our fellow man by how we make our money but also by how we give it. Helping our clients experience the joy of giving is even more meaningful to us than providing attractive investment returns."

Posted by: Ogre at 03:04 PM

Comments

Posted by: Wuptdo at October 02, 2007 05:32 PM (axYNA)

Posted by: Ogre at October 03, 2007 11:37 AM (oifEm)

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