Mutual Fun

In 2004, a group called the Rainforest Action Network (RAN) began pressuring JPMorgan Chase to cut off ecologically unsound projects, such as a Morgan-financed oil pipeline through the Ecuadorian Amazon. The effort consisted mostly of standard activist fare--protests at branch offices, a blitz of accusatory ads. But one tactic especially galled conservative busybody Steve Milloy: In December, RAN dispatched a contingent of second-graders from Fairfield, Connecticut, to protest the bank's lending policies at its Manhattan headquarters. Milloy, who would later dub the incident "ideological child abuse, " mobilized for a fight.Except that Milloy wasn't satisfied with the usual conservative agitprop. What he had in mind was something new: a mutual fund dedicated to battling the creeping influence of environmentalists and other leftists over corporate America. His Free Enterprise Action Fund would invest in companies being bullied by liberal activists. These investments would, in turn, allow him to attend the shareholder meetings as a kind of counter-mau-mau-er. In the spring of 2005, for example, JPMorgan had appeased RAN and its allies by, among other things, committing the company to advocating reductions in greenhouse gases. Milloy subsequently showed up at a JPMorgan annual meeting and laid into CEO William Harrison for making the company "a tool of the radical environmental movement." There was a time when being a right-wing investor meant you cared about the same things as every other investor, only more so. Conservatives were the cold, unemotional types who would sell their kids into slavery if it meant boosting their portfolio. But, these days, Milloy and a handful of like-minded fund managers seem more interested in scoring ideological points than in scoring a buck. It's enough to make you pine for a good old-fashioned tight-wad in a pinstriped suit. The annual Doctors for Disaster Preparedness (DDP) conference is hardly the place you'd expect to find a mutual-fund manager prospecting for investors. The DDP was formed in the early '80s to lobby for a strong civil defense as insurance against Russian nukes. After the Soviet Union's demise, it refashioned itself as a kind of existential-threat referee, sorting out "manufactured" dangers (like global warming and ozone depletion) from real ones (like the risk of a dirty-bomb explosion). Suffice it to say, DDP members seem more interested in the apocalypse than their 401(k)s--the group's website features an ad for a "24/7 Radiation Monitor and Alarm" called NukAlert. And, yet, there was Milloy pitching his fund at last July's DDP gathering in Las Vegas. Milloy is revered in some conservative circles for his skeptical writing on subjects like climate change and the dangers of secondhand smoke. (Under the headline "waiting for gore-doh...," his website, JunkScience.com, tracks the time elapsed since he challenged Al Gore to a global-warming debate.) As the new republic reported earlier this year, much of the financing for Milloy's science-debunking comes from the oil and tobacco industries, though that hasn't stopped it from running in such outlets as FoxNews.com. (Milloy didn't respond to my requests for comment.) This conflict of interest doesn't appear to trouble DDP, either. "He has written so eloquently about rational risk assessment, debunked damaging myths," gushes DDP president and internist Jane Orient. Once Milloy finished his spiel, the doctors practically stumbled over themselves lining up to invest. "During the Q&A period, there was more than one person that got up and said, before asking a question, `I'll go home and write you a check,'" says Jack Dini, a conference attendee who personally forked over $1,500. In making the case against Wall Street, conservatives like Milloy wield a historical narrative that goes something like this: Up until about 30 years ago, liberalism was the most potent political force in the country. But conservatives started to regroup in the 1970s, and, three decades later, they finally conquered Washington. It was then that liberals did something truly insidious: They shifted their focus onto the boardrooms of corporate America, where they could implement their enviro-feminist-multi-culti-socialist agenda without ever winning an election. Recent liberal triumphs include the anti- sweatshop campaign against Nike and Reebok and the effort to win gay partnership benefits from Home Depot. To gauge how exercised conservatives are by "corporate social responsibility, " you need only consult a recent fatwa issued by supply-side guru Arthur Laffer, father of the eponymous curve. Laffer's pronouncement took the form of a study purporting that socially responsible companies underperform relative to their competitors. This is the old conservative complaint: Being a do-goodnik is bad for the bottom line. But there is also a new, more ideological argument that explains why a corporate shill like Milloy would transform himself into a CEO- stalking gadfly: If the social responsibility movement isn't defeated now, it will eventually undermine the entire American way of life. Call it the Domino Theory of anti-capitalist subversion. The irony is that, in order to stop this imminent collapse of the capitalist order, conservatives are themselves making investments that are bad for the bottom line. The fine print in the Free Enterprise Action Fund prospectus notes that Milloy's investing guidelines "may cause the Fund not to perform as well as other Funds that choose their investments based strictly on financial considerations." In 2005, the fund earned an anemic 2.3 percent return. But, despite this, Milloy attracted over $5 million from investors in a single year. And it's hard to find one who isn't satisfied with the fund's psychic rewards. Consider the case of Hugh Wise, an Action Fund investor who met Milloy while working as an industrial chemist in Washington, D.C. Wise says he transferred $1,000 from his Merrill Lynch account to the Free Enterprise Action Fund as soon as Milloy mentioned the new venture. He did so because he deemed it important to "take environmental issues out of the mix for considerations for major corporations ... to dismiss them with ridicule if necessary." Wise doesn't expect to make any money from his investment, but he believes in the cause so strongly that he eventually kicked in another $1,000. Not every conservative is ready to blow his nest-egg on an ideological statement, of course. For those conservatives, Dan Ahrens has created just the fund. Back in 2002, the Dallas-based mutual-fund executive could barely contain his schadenfreude when a group of socially responsible mutual funds (known as SRIs) got trampled in the tech bust. Ahrens began joking to friends that he could have made a killing investing in all the tobacco, alcohol, gaming, and aerospace companies the SRIs spurned. On a lark, he plotted the recent performance of these sectors and realized he was right. These efforts eventually begat the "Vice Fund," which Ahrens promised would invest at least 80 percent of its money in various "vice" industries. As gimmick funds go, the Vice Fund has been a minor hit, attracting roughly $50 million in capital during the three years Ahrens ran it. Ahrens claims the fund's primary mission is to make money, and it's true that the fund has posted above-average returns. But it's hard to avoid the impression that Ahrens was as eager to make a point as the SRIs he scorns. In his book, Investing in Vice: The Recession-Proof Portfolio of Booze, Bets, Bombs, and Butts, Ahrens blasted the hypocrisy of SRI funds that invest in rapacious monopolists like Microsoft but not honest, well-run corporations like Anheuser-Busch. The fund's cartoonishly ominous, black-and-white website notes that the Founding Fathers were tobacco farmers and suggests there's something patriotic about investing in vice. It's a shtick that makes conservative publications giddy. "The introduction of the Vice Fund flies in the face of so-called socially responsible and morally responsible investing," crowed a Washington Times article in 2002. Ahrens left the Vice Fund last September after a falling out with its parent company. From time to time, he still gets wistful about his Vice Fund glory days. "I'd love to be managing that fund still," he confided to me. That probably helps explain his latest venture: A mutual fund devoted entirely to gambling stocks. It almost makes you wonder if, somewhere in the conservative imagination, there isn't a Skin-Flicks Growth Fund lurking just around the corner.