The ongoing BP disaster in the Gulf of Mexico highlights another argument for understanding what’s in your mutual funds. I don’t hold, or flaunt, many strong political views, but environmental causes are dear to my heart, and as the oil spill has continued to grow I’ve been reminded that if you don’t know what you own, then you don’t know what your companies are doing with your dollars. I don’t trade actively enough to have instant recall of my holdings, particularly within my 401(k), so as news first broke of the Deepwater Horizon explosion, I went immediately to check my accounts.
Since nearly all of my individual investments remain in individual equities, my first move was to look into my 401(k)’s plan holdings. My firm offered relatively few options, so I am split primarily in a handful of mutual funds. As we’ve discussed, a quick way to check the top 10 holdings and industry stratification of any fund is through Yahoo! Finance (for example, here’s Fidelity OTC Class K ). Taking a bit of time to research and and look up each of my funds, I was relieved to learn that none of my investments are concentrated in BP or other offshore drilling ventures, and further, that my industry exposure made even trace holdings unlikely.
Of course, with BP off about 35% since the explosion, there’s an economic element to my satisfaction. I’d generally like to think any decisions I make about my investments assess business and financial risk rather than purely ethical concerns. While there’s no room in a sound investing strategy to act emotionally, I sleep better at night knowing that achieving my investing goals doesn’t conflict with my convictions.