Got Vice?

October 17th, 2006 - - Filled in: Money/Investing

First off…the usual disclosure: I am not a licensed investment advisor nor am I qualified to give financial advice…and no I don’t own this fund or work for a company that has any interest in the fund or its investments, etcetera, and so on, yada yada…yada.

Ok…now that that’s out of the way, allow me to introduce you to The Vice Fund. A buddy of mine from Dallas told me about this fund back in 2003; it was created in August 2002. The fund invests in small, medium, and large cap equities of companies whose revenues are generated from tobacco, gaming, defense/weapons, and liquor just to name a few. According to the prospectus, these companies are involved in industries that are considered to be “recession-proof”. So what if this fund is not considered “socially responsible”? Let’s take a look at what investing in these so-called sin stocks has done for its investors in the past.

Year to date, the fund has a return of 14.17% (10-17-2006, Morningstar.com). If I’ve done my research correctly, that’s better than that of the DOW, NASDAQ, and the S&P 500. And although it currently features Morningstar’s 4-Star rating, it did achieve a 5-Star rating back in March of this year. It is also in the top 3% of the 3-Year Lipper Quartile ranking.

So while all that sounds neat, what’s even cooler is the theorization that the fund could likely continue this success. The returns were acheived during a bull market; and unless my college professors told me wrong, these types of stocks…let me reword…these types of industries can also benefit from economic downturn…a bear market. How can you go wrong…I mean…other than investing in these companies that spread bad around our society? The notion of donating some of your “winnings” to charities is a start. I believe I read somewhere that this is the suggestion of the fund’s manager, Charles Norton. Whether sincerely or sarcastically, he has a point especially if you’re into making good returns. Just writing this is piquing my curiosity…and my consideration.

Past performance does not guarantee future results.

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