Vice Fund’s sin stocks are on a major roll

BOSTON - Vice sells. And with tobacco, alcohol and gambling stocks on a roll, Mutuals.com's Vice Fund has jumped into the top 1 per cent of more than 700 mutual funds in its classification.

Since the end of last year, the fund has attracted more than $US12 million ($NZ16.8 million) in new money, a 55 per cent increase. It now has $US34 million under management, and expects to hit $US100 million by the end of next year.

"We attract all types of investors," Dan Ahrens, the portfolio's manager, said in an interview. "Many are investors who don't smoke, drink or gamble, but it makes sense to them that other people do."

Performance has been steady as the Vice Fund returned 16.1 per cent in the 12 months ended March 31, beating the Standard & Poor's 500 Index, which rose 4.8 per cent in that period.

The fund's performance ranks among the top 1 per cent of 781 funds in its multi-cap core category, according to Lipper Inc, a unit of Reuters Group Plc. Multi-cap core funds returned an average 5.8 per cent over the period, Lipper said.

The Vice Fund, opened in August 2002, has 80 per cent of its assets in tobacco, alcohol, gaming and defence stocks.

"We hold up well in short downturns and do well in upmarkets, too," Ahrens said.

And the Vice Fund's bet on so-called sin stocks has paid off handsomely. Among its top performers is United Defense Industries, which makes combat vehicles, artillery and missile launchers. In the 12 months ended April 12, the company's stock shot up 121.3 per cent.

Mikohn Gaming Corp, a technology company for casino slot machines, also helped the fund, with its stock skyrocketing 213.8 per cent in the past year.

Spirits supplier Constellation Brands Inc gained 79.7 per cent in the past 12 months and the stock of tobacco giant Reynolds American Inc rose 34.2 per cent in the past year.

"Everything in tobacco has been up. There are no losers," Ahrens said. "It's very stable."

- REUTERS