Vice is Nice

Checking in on the wages of sin

When Buzz last checked in with the Dallas-based Vice Fund (VICEX) at its birth late last August, the mutual fund's managers were betting that investing in sin would pay off big. There are few certainties in life, the reasoning went. There are death and taxes, then there's the human hunger for booze, smokes, gambling and violence. You know, all the little things we need to cope with the certainty of death and taxes.

Now that a year has passed, Buzz decided to check back to see how the wages of sin are for the specialty fund that invests in tobacco, defense, gaming and alcohol companies. Turns out they're not bad. Not bad at all. So far this year, the Vice Fund has returned around 17.2 percent, beating the S&P 500 index (14.7 percent) and Dow Jones industrials (13.1 percent). Of course, you might expect that a fund that invests a quarter of its holdings in the aerospace and defense industries would do well in 2003, seeing how there was a war and all. Oddly, portfolio manager Dan Ahrens says defense has been one of the worst performers this year. The better performer has been gambling companies, among them those managing state lotteries.

Tobacco also has been doing fine, despite what you may think after all the anti-smoking lawsuits. Too many state budgets depend on tobacco tax revenue to allow litigation to kill that golden-egg-laying goose, Ahrens says. Alcohol also has been holding up. All of which makes a kind of perverted sense, given the economy. Out of work? Stop off at the convenience store for a tall boy, a pack of smokes and a lottery ticket.

Despite the, um, good (?) news for vice, we wondered if perhaps Ahrens' conscience might be troubling him. Ever wake up in the middle of the night feeling like one of Satan's minions? Buzz asked.

Nope, he says.

Since the fund's launch, 95 percent of the press coverage has been positive, he says. We suggested that might be because the news business attracts a fair percentage of smoking, sinful boozehounds, but Ahrens says it might also be that the public doesn't see these companies as inherently evil. Brewer Anheuser-Busch is a large contributor to charities and alcohol awareness programs and one of the nation's first recyclers, Ahrens says. Why, even the Vice Fund's prospectus is printed on recycled paper, he says.

Of course, Ahrens was talking to Buzz, so he was sort of preaching to the choir. It'll be interesting to see how his argument washes with a more demanding audience. St. Peter, say...

 
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