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Vice Fund

A mutual fund that invests in alcoholic drinks, tobacco, gambling, and defense industries

What is the Vice Fund?

The Vice Fund, managed by USA Mutuals, is a mutual fund that invests in alcoholic drinks, tobacco, gambling, and defense industries. The word vice means immoral and wicked behavior, indicating the somewhat questionable investment strategy adopted by the Vice Fund.

 

Vice Fund

 

Origins and Philosophy of the Vice Fund

In 2001, the Vice Fund was created to provide long-term, risk-adjusted returns for investors. The fund targeted alcoholic drinks, tobacco, gambling, and defense industries because of the more predictable consumer behavior and barriers to entry into the industries. Because of the substantial barriers to entry, the Vice Fund was also known as the Barrier Fund.

Furthermore, technology tends to exert little to no effect on the industries. It is unlikely that technological advancements would revolutionize the whole alcohol or tobacco industries than to the other traditional industries such as food and clothing.

The characteristics of the industries, in return, make the Vice Fund a relatively safer investment decision.

 

Fund Performance

 

Vice Fund - Performance
Source

 

In spite of being controversial, the Vice Fund’s performed well since it started in 2002. The fund performs better than the S&P 500 not only during the good times but also during a recession. The information suggests that investing in vice offers profitability and steady growth.

Based on the performance, the Vice Fund is considered, by some investors or mutual fund managers, as an alternatively steady investment option.

 

Fund Outlook

The Vice Fund was founded to align with the best interest of investors. However, investors seek more than monetary profits for return. Many studies suggest that shareholders favor social and environmental performances as well.

As a result, some ethically conscious investors choose to invest in the Virtue Fund, which is a fund that focuses on socially responsible and ethical businesses. Some people argue that the Virtue Fund does not come with a cost and pays at least as much as the Vice Fund.

Social, environmental, and ethical changes can profoundly change the way people consume different products. The vice industries may change, as society is moving toward a more ethical economic development in the long-term. Correspondingly, the Vice Fund will need to adopt its investing philosophy and strategy.

Undeniably, there is a huge gray area between the Vice Fund, the Virtue Fund, and many other funds. There is no universal agreement in determining morally or immoral business activities and investment decisions. The investors themselves have the sole right to choose the actions and investments that best align with their interests.

 

Related Readings

CFI is the official provider of the Certified Banking & Credit Analyst (CBCA)™ certification program, designed to transform anyone into a world-class financial analyst.

To keep learning and developing your knowledge of financial analysis, we highly recommend the additional resources below:

  • ESG (Environmental, Social, and Governance)
  • Sustainable Investing
  • Threat of New Entrants
  • Open-end vs Closed-end Funds

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