Production Mutual Funds

May 5th, 2009 by Fred Collopy (FredCollopy)

In choosing to invest in a balanced portfolio of stocks most investors are electing to invest their available capital in the wealth potential of our (or the global) economy. In fact, many of us have inadvertently placed up to 40% of our funds into situations that have little to do with wealth creation and more to do with wealth management. A simple idea is to separate out the two so that investors can choose whether they wish to invest in one or the other, or some mix of the two.

I propose building diversified portfolio funds of companies that make things or provide concrete services and experiences. By concrete, I mean services such as restaurants, hotel stays, public transportation, auto repair, health care, and amusement park visits. I mean to specifically exclude activities such as financing, investment management, insuring, and hedging. The test for inclusion would be “would an ordinary person recognize this as a service they need or desire independent of its potential to affect their wealth?” To be included in these portfolios a company would have to generate all (or some clearly identified percentage) of its revenues from such non-financial activities.

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3 Responses to “Production Mutual Funds”

  1. susanb Says:

    this is like the domestic-content labeling. You can separate out production from other activities just like you separate out foreign from domestic production. It is a GREAT idea. Certainly there are mutual funds for everything else.

  2. tallpaul Says:

    I like the idea but how does this become national policy. Isn’t this just a good idea for mutual funds?

  3. FredCollopy Says:

    The labeling standards would likely be a matter of policy (though mutual funds could proceed without them through extensive disclosures).

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