Vice Fund (VICEX) Performance Analysis: Does Being Naughty Pay Off?

Vice Fund (VICEX) is a mutual fund that invests in the tobacco, gambling, alcohol, and defense industries. It’s a very clever marketing idea to invest in these naughty stocks. When portfolio managers are generalists, limiting oneself to certain industries hampers returns. But returns are slightly better when fund managers are experts in those industries.

Insider Monkey, your source for insider trading data, obtained Vice Fund’s returns from Yahoo! Finance and applied Carhart’s four factor model to calculate its alpha. Vice Fund charges nearly 2% in management fees and has a 60% annual turnover. Our regression results for the past 5 years shows that the Vice Fund has a market beta of 0.92. The fund invests in mid size growth stocks on the average. Vice Fund’s alpha is -2.4 basis points per month, which is really zero.

We don’t think it’s a good idea to invest in the Vice Fund (VICEX) mainly because of its nearly 2% management fees. The fund’s strategy is pretty straight-forward and seems to generate a small alpha before expenses. It shouldn’t be difficult to monkey their holdings/strategy. Their turnover is pretty low. On the average they hold each stock more than 18 months and they may not even have stock picking ability. It’s possible that one might be able to generate better returns by passively investing in these industries. Lower costs and longer holding periods might deliver much better after-tax returns.

Vice Fund’s management charges a very high management fee and effectively captures all the alpha the strategy can generate.

In short, mutual fund investors end up making market returns without the tax benefits of passive investing. 

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!