Advertisement
Investing

The Fund Route to Sin Stocks

If you don't want to muck around in sin stocks, hire a mutual fund manager to do the dirty work for you.

Only one fund specializes in the entire range of sin stocks. Vice fund, run by Charles Norton since September 2005, invests in alcohol, gaming, tobacco and defense. We hardly consider military-related companies to be sinful, but Norton includes them because they tend to run counter to general economic trends and because most socially screened funds -- polar opposites of his fund -- shun them. Top holdings include Altria, Diageo and British American Tobacco. Vice gained 21% in 2007 to December 10, compared with the S&P 500's 8% return. The $177-million fund (symbol VICEX) doesn't levy sales fees, but it charges a hefty annual fee of 1.75%.

Dan Ahrens, former manager of Vice fund, now runs the tiny (assets of $3 million) Ladenburg Thalmann Gaming and Casino fund. The fund holds just 35 stocks, including Penn National Gaming, Las Vegas Sands and MGM Mirage. Since its March 2006 debut, performance has been as erratic as a floating craps game. In 2007 to December 10, the fund (GACFX) gained 3%. Annual fees are 1.70%.

Advertisement - Article continues below

So-called leisure funds and other specialized funds may also hold healthy doses of sin stocks. Geoff Kuli, manager of Fidelity Select Leisure since October 2006, hunts for reasonably priced, growing companies in the media, entertainment, cable, food and beverage industries. At last report, the fund (FDLSX) had about 15% of its $263 million of assets in gaming stocks. Select Leisure gained 9% in 2007 to December 10. About one-fourth of Rydex Leisure's $9 million in assets are in casino stocks. The fund (RYLIX) uses a formula to buy equal portions of stocks in the leisure sector. Over the past five years, it returned 14% annualized, beating the S&P 500 by an average of one percentage point per year.

Fidelity Select Consumer Staples recently kept 20% of its portfolio in alcohol and tobacco stocks. The fund (FDFAX), managed by Robert Lee since June 2004, has a three-year annualized return of 18%, which beat the S&P 500 by an average of seven percentage points per year.

Advertisement
Advertisement

Most Popular

11 Dividend-Paying Stocks You Should Think Twice About
dividend stocks

11 Dividend-Paying Stocks You Should Think Twice About

Dividend-paying stocks often can be a store of safety, but 2020 has been difficult on income equities. These 11 picks look like shaky plays despite th…
September 21, 2020
Medicare Basics: 11 Things You Need to Know
Medicare

Medicare Basics: 11 Things You Need to Know

There's Medicare Part A, Part B, Part D, medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare --…
September 16, 2020
Where You Should Invest Now
investing

Where You Should Invest Now

Kiplinger.com senior investing editor Kyle Woodley joins our Your Money's Worth podcast to answer investor questions about tech stocks, the election a…
September 22, 2020

Recommended

10 of the Best Target-Date Fund Families
mutual funds

10 of the Best Target-Date Fund Families

The best target-date funds are a 'set it and forget it' approach to your retirement, but which fund family should you trust your money?
September 17, 2020
Best Bond Funds for Every Need
Investing for Income

Best Bond Funds for Every Need

In a changing market, it’s important to remember why we hold bonds in the first place.
September 15, 2020
How to Build a Bond Portfolio
Becoming an Investor

How to Build a Bond Portfolio

No single bond (or even bond fund) can do it all. We'll help you match your goals with appropriate fixed-income picks.
August 27, 2020
Time to Buy Japanese Shares?
Foreign Stocks & Emerging Markets

Time to Buy Japanese Shares?

In a weak global economy, T. Rowe Price Japan finds firms with healthy balance sheets.
August 27, 2020