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  1. munch

    3,567 Posts.


    Skimming From the Wages of Sin
    Worried about the future? Losing faith in humanity? With the Vice Fund, you can channel those anxieties into a promising investment strategy.
    By Evelyn Nussenbaum, November 2002 Issue

    Stocks are in the tank, jobs are scarce, war is in the news, and al Qaeda's still on the loose. It's enough to drive you to drink ... or smoke ... or gamble. At least that's what a new mutual fund thinks you'll do. The Vice Fund (VICEX), created by Mutuals.com of Dallas, hopes to capitalize on tough times by investing in "socially irresponsible" stocks like Anheuser-Busch (BUD), Philip Morris (MO), and Harrah's Entertainment (HET).

    Fund managers Dan Ahrens, 36, and Eric McDonald, 30, have managed modest amounts of institutional money and sold packages of mutual funds to the public; this, however, is their first attempt to pick stocks for their own fund. But Ahrens insists that with $2.5 million invested so far, the Vice Fund is no gimmick. "Warren Buffett says to invest in what you know," he explains. "This fund is very easy to understand."

    The Vice Fund assumes bad behavior is an essential part of the human condition, so companies that cater to our baser instincts will perform well over time. Still, the fund casts a wide net to find "socially irresponsible" stocks. Ahrens recently bought videogame maker Electronic Arts (ERTS), reasoning that "there are a lot of action games that are pretty violent." Yet there's one conspicuous omission from the portfolio: pornography. The fund's managers have no ethical qualms about adult entertainment. The problem, Ahrens says, is "we just haven't found any good ones." Or maybe they're just having too much fun with the research

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