Invest Strong: The Lance Armstrong Mutual Fund

Lance_armstrong_b300Now we know why Lance Armstrong retired from professional cycling: so he could start his own mutual fund.

Well, not exactly.  But fund company American Century does plan to rename its retirement funds "Livestrong" and make a minimum $1 million contribution to the Lance Armstrong Foundation.

The Livestrong Funds--and others like it--differ from "socially responsible" funds in that they are not precluded from investing in things like alcohol and weapons.  American Century can invest in whatever it wants--including cigarette companies, I assume--so long as it makes a donation to Lance's foundation at the end of the year.

American Century is smart to partner with Lance.  The Armstrong brand is particularly powerful as you get an athlete (cool), a celebrity (sexy) and a philanthropist (caring) that appeals to both men and women--except my wife who thinks Lance is a dog for dumping his wife.

While investors may not admire all the companies in which Livestrong invests compared to those in socially responsible funds, they'll probably be happier with the performance.

In recent years, market sectors [socially responsible funds] tend to avoid, like defense and energy, have performed well, while areas they tend to favor, like technology and health care, have lagged behind. Over the past five years, the average diversified socially responsible stock fund delivered a 2.7% annualized return, compared with a 5% average return for diversified stock funds overall, according to fund research firm Morningstar Inc.

The Lance Armstrong Foundation won't be the last nonprofit to get into the investment business.  I suspect Komen will soon have a "pink" mutual fund that invests only in things like plastic flamingos and pink marshmallow peeps.  And if you like your peeps as old and stale as I do you'll understand that this fund is best held long-term.

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