What is the Vice Fund?

Mary McMahon
Mary McMahon

The vice fund (VICEX) is a mutual fund which focuses its investment in so-called “sin stocks.” These are stocks in companies that participate in industries which some people believe are ethically or morally dubious. The vice fund was established in 2002 when investors noted that such industries had a tendency to be recession proof, with demand which did not slack during periods of economic downturn.

A vice fund may invest in tobacco products.
A vice fund may invest in tobacco products.

There are four different industries which the vice fund invests in: alcohol, tobacco, gaming, and the defense and aerospace industry. As a trend towards socially responsible investing began emerging in the 1990s, some people worried about holding such stocks because of ethical concerns, and some mutual funds actively advertised that they only made ethical investment choices, avoiding the sin stocks. The vice fund does just the opposite, explicitly buying stock in companies like Philip Morris, Raytheon, Pernod Ricard, and Lockheed Martin.

Trade in the products produced by these companies occurs at very high volume and on a global level. From a business perspective, an investment in the vice fund can be very sound because it is likely to generate positive returns although like any mutual fund, it can experience downturns. No industry is completely immune to economic pressures and radical declines can lead to reductions in the demand for goods ranging from aircraft to cigarettes.

Like other mutual funds, the vice fund must provide information to the public about its performance. It is listed in mutual fund indices, for people who are interested in tracking the fund's performance history. Financial publications also periodically profile the vice fund, looking at its holdings, its activities in the market, and its performance to provide information about whether or not it is a sound investment choice. Publications concerned with ethical investment may look at the hidden costs costs behind the industries in the vice fund as well.

Currently the vice fund is administered by USA Mutuals, which also offers a number of other investment products. As with any mutual fund, it is not advisable to concentrate all investments in the vice fund, but rather to distribute investments across multiple areas of the investment community in order to spread risks. Before investing in this fund, people may also want to consider the moral and ethical implications; some people do not mind having sin stocks in their portfolios or investing in funds which profit from sin stocks, while other people may feel uneasy about profiting from these industries.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a wiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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