January 09, 2006

Follow The Money

They say it's never too early to invest in your future, and that with every year you put off saving money, or deferring income into your 401k, you lose precious opportunities down the road. With that in mind, I've been putting what I can afford into the 401k offered by work, and trying to be smart through diversification, I split up the allotments to a few funds which Fidelity, our provider, claimed to be the most consistent.

But mutual funds are made up of a collection of individual stocks. The highest growth funds are dominated by technology and healthcare stocks (Google, Apple and the like) - which I'm fine with. But this weekend, I looked at the breakdown of the "Fidelity Equity-Income II Fund", which is a middle of the road performer... doesn't go up a lot, doesn't go down a lot, and increases bit by bit over the year.

Guess what were some of the stocks in the fund's Top Ten holdings?

* Exxon Mobil
* Walmart
* Halliburton
* Microsoft
* News Corp (Owner of Fox News, enough said)

The top ten stocks make up 23% of the portfolio, and these are five of the top ten, but yikes! What is this? The crooks and liars fund? I'm out! So I went into the online records and moved all the money in that fund to a different one. I'll have no part in making those companies feel financially secure.

I guess it's one small step toward feeling socially responsible. But don't expect my change to "rock the markets" per se. I don't own a controlling share of any of these companies.