An Offense for Defensive Times

08/05/2005 12:00 am EST

Focus:

Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

Writing from London during the recent terrorist attacks, Mark Skousen notes, "Our Anti-Terrorist Portfolio performed well during the crisis." Here, he provides an overview of the funds that make up this defensive portfolio, designed to perform during difficult times.

"Overall, I believe the funds in the Anti-Terrorist Portfolio will do well in times of war and peace, though the portfolio is geared to profit the most when the terrorist threat increases. All five of the funds in our Anti-Terrorist Portfolio are performing well. Indeed, these mutual funds couldn't be working harder for us. Fidelity Defense & Aerospace Fund (FSDAX) is one of our best performers overall, with holdings in Lockheed Martin, Boeing, and Goodrich. The fund recently hit another 52-week high.

"The Vice Fund (VICEX) was up 4.7% last month. It profits from the 'sins' of smoking, gambling, and drinking by investing in companies such as Altria (Philip Morris), Budweiser, and Harrah’s. Some of its best performers include Mikohn Gaming Corp., Reynolds American, and spirits supplier Constellation Brands Inc. Why is the Vice Fund in the Anti-Terrorist Portfolio? Simple. During these times of crisis, consumers are likely to increase the use of 'vice' substances. Plus the Vice Fund has defense stocks in it, such as United Defense Industries.

"Meanwhile, our commodity related holdings continue to rise at a fast pace, helped by rising oil, gold, and copper prices, Oppenheimer Real Asset Fund (QRANX) climbed 11%, nearly erasing the previous month’s 10% loss. Tocqueville Gold Fund (TGLDX) also jumped 7%. Our safest investment, PIMCO Real Return Fund (PRTNX), which invests in US and non-US inflation-indexed bonds."

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