When mutual funds step off the beaten path, there's no telling what will happen. In the past, for example, oddball funds have fought the war on terror (the Ancora Homeland Security Fund), tried to prop up the sky (the Chicken Little Growth Fund), and fantasized about swinging a presidential election (the Blue Fund). And although those three particular funds—all of which have been liquidated—failed, others have stepped in to carry the torch and preserve a long and proud tradition of eccentric investing styles. Here are the 10 quirkiest funds we could find:
The Congressional Effect Fund (CEFFX). This fund exists to answer the question posed in enormous letters at the top of its website: "How much investment wealth does Congress destroy?" As the question suggests, the fund has a rather cynical view of the country's political leaders. In fact, its manager sees politicians' disruptive influences as so far-reaching that when Congress is in session, he pulls completely out of the stock market and moves the entire portfolio into treasuries, cash, and money market funds. "Over the very long haul, it's almost always bad for the market," manager Eric Singer says of congressional action. Unfortunately, those pesky politicians on Capitol Hill seem to think Congress needs to be in session every now and then, so the fund has largely missed out this year on the furious rally in stock prices and has landed in the bottom percentile year-to-date in Morningstar's moderate allocation category. Still, Singer says he has compelling research to back up his strategy. According to the fund's numbers for the period between Jan. 1, 1965, and Dec. 31, 2008, the S&P 500 registered a paltry 0.31 percent annualized gain when Congress was in session, compared with a 16.15 percent annualized increase when Congress was on vacation.
The StockCar Stocks Index Fund (SCARX). At first glance, this fund, which tracks an index of companies that support NASCAR's Sprint Cup Series, is a dream come true for racing fans. But a more careful look reveals a different story—most of its holdings are only tangentially related to NASCAR. Investors might be surprised to see that aside from car-related names, the fund's top holdings include Disney, Target, Coca-Cola, and Sony. "[You have] two or three legitimate NASCAR plays, and then you have to go into all sorts of whacky stuff like Target and Coca-Cola because they sponsor someone's car," says Russel Kinnel, Morningstar's director of mutual fund research. Over the years, the fund's performance has been a touch erratic, but its returns year-to-date are enough to land it in the top quartile of Morningstar's large value category.
The Blue Chip Winery Fund. Jokingly called the best "liquid" investments on the market, wine funds once enjoyed some popularity. But unlike a good glass of wine—or investment, for that matter—these funds have usually not gotten better with age, and most of the ones that were around several years ago have since crashed and burned. Nevertheless, this fund, which was launched in October and is based in the Bahamas, takes a bit of an untraditional approach to wine investing: Instead of buying actual bottles of wine, it will invest exclusively in real estate holdings like wineries and storage facilities. In particular, the fund's management is looking to take advantage of the cheap property prices created by the recession. "Given the current economic environment, there are a lot of [opportunities]," says comanager Bruce Ramsey. Aside from the chance for capital appreciation, investors can look forward to the perks that this quirky fund offers, including discounts on food, hotel rooms, and spa treatments at select wineries. According to the fund's website, shareholders also get first dibs on the wine produced at these properties and the chance to "help pick grapes, prune vines, and taste-test the wines as they progress from juice to bottled wine."
The Herzfeld Caribbean Basin Fund (CUBA). While most managers talk about investing with long time horizons, few are willing to stake large chunks of their fortunes on an event that may never happen in the lifetime of their funds. But for the past 15 years, fund manager Thomas Herzfeld has been doing just that as he patiently waits for the Cuba embargo to come crashing down. Along the way, Herzfeld has chosen stocks for this closed-end fund based largely on companies' prospects for success should the embargo be lifted. While he also holds significant positions in Mexico, Herzfeld is particularly keen on investing in U.S. companies that could explode in value if the United States and Cuba begin trading. Gimmicks aside, the fund looks for companies that can also hold their weight in the current political environment. Its top holding, for example, is Freeport-McMoRan Copper & Gold, the share price of which has more than tripled year-to-date.