They tend to run counter to general economic trends and are shunned by socially responsible funds, but “sin stocks” – or funds that invest in alcohol, tobacco, gambling and the military – have continued to perform exceptionally well, Kiplinger’s reports.
Many funds invest in a few sin stocks, but only one specializes in them exclusively.
Through Dec. 10, Vice gained 21%, compared to the S&P 500’s return of 8%.
With $177 million in assets, Vice charges an annual fee of 1.75% but no sales fee.
Many leisure funds also hold large doses of sin stocks, including Geoff Kuli’s Fidelity Select Leisure, which focuses on companies in the media, entertainment, food and beverage and cable industries. Select Leisure has about 15% of its $263 million in assets invested in gaming stocks, and gained 9% in 2007.
Fidelity Select Consumer Staples has 20% of its portfolio invested in alcohol and tobacco stocks and has seen an annualized return of 18%.