September 3, 2002

10:32 AM

Anti-PC investing.
Tired of all those namby-pamby "socially responsible" mutual funds out there? Me too. That's why I'm putting my money in the Vice Fund, the first socially irresponsible mutual fund. It started trading today, investing in companies that benefit from smoking, drinking, gambling and defense spending.

"It is our philosophy that although often considered politically incorrect, these and similar industries and products...will continue to experience significant capital appreciation during good and bad markets. We consider these industries to be nearly 'recession-proof.'"

posted by me3dia (34 comments total)

The fund was created by Mutuals.com (which recently bought the remains of dot-bomb MutualFunds.com for a measly $55,000.) We won't know for a month the exact companies the fund invests in, or how well the fund will do, but this chart shows the potential component stocks for the fund beating the S&P500 by about 40 percent over the last five years.
posted by me3dia at 10:33 AM on September 3, 2002

Paraphrase of a recent Dilbert comic:

Dogbert: I've been diversifying your portfolio behind your back. I've been investing in tobacco, alcohol, and gambling.
Dilbert: How am I doing?
Dogbert: Mixed. you're getting a 37% return, but your soul will burn for eternity.
posted by GeekAnimator at 10:50 AM on September 3, 2002

We consider these industries to be nearly 'recession-proof.'

What if they cause a recession?
posted by o2b at 10:55 AM on September 3, 2002

What if they cause a recession?

Then the invisible hand slaps us all.
posted by Ufez Jones at 11:05 AM on September 3, 2002

Rebelling against political correctness is so 1999.
posted by skylar at 11:21 AM on September 3, 2002

Pointing out that things are so 1999 is so 2000.
posted by websavvy at 11:22 AM on September 3, 2002

sounds like grayson moorhead securities! keke :)

and they should get anna kournikova to promote it! rowr :) or like the williams sisters! double rowr :)
posted by kliuless at 11:33 AM on September 3, 2002

What if they cause a recession?

To alcohol! The cause of, and solution to all of life's problems.
posted by Fenriss at 11:53 AM on September 3, 2002

What an awful idea. Gimick investing, especially so tightly circumscribed as this (three industries?) is very dangerous. So-called PC investing excludes few industries (although these three are included); its goal is to invest in companies that promote social and environmental progress- and that could be almost anything, really. And I'm surprised they don't include private prison outfits - talk about a growth industry.
posted by risenc at 12:15 PM on September 3, 2002

So-called PC investing excludes few industries

Why haven't PC funds been able to match the returns other funds have achieved?
posted by peeping_Thomist at 12:34 PM on September 3, 2002

I'm waiting for the all-porn mutual fund. Low cost, high margins, and recession-proof. Hell, people probably turn to porn in tough times - so it'll go up during a recession.

It's comfort food.
posted by owillis at 1:02 PM on September 3, 2002

Why haven't PC funds been able to match the returns other funds have achieved?

OK, let's at least use the right terminology, shall we? It's socially responsible funds, not "PC funds."

And, in fact, some of the funds in question are doing pretty well given the current climate. For example, a few of the Calvert Groups' income funds were showing gains as of August 31st. Are you sure you're interesting in discussing the actual merits of the portfolios, or is your issue with their politics?
posted by Fenriss at 1:05 PM on September 3, 2002

Risenc, the fundamentals of the fund are solid; take a look at the link I posted above -- they tracked results for stocks in the alcohol, tobacco, gambling, aerospace and defense industries (five fairly broad chategories, by my count) over the past five years. Those sectors beat the S&P500 by about 40% in a period that combined both bull and bear markets.

Keep in mind that these sectors include such stalwarts as Phillip Morris (who also owns Kraft, etc.), GM (major defense supplier) and GE (ditto). Not exactly the riskiest of stocks. Keep the prison stripes in the closet.

Why haven't PC funds been able to match the returns other funds have achieved?

Actually, they can and have -- during a bull market, at least.

Owillis, I'm with ya, buddy. Unfortunately, most porn companies haven't gone public like Playboy. But as soon as they do, I'm sure there will be a fund for you.
posted by me3dia at 1:07 PM on September 3, 2002

I'm waiting for the all-porn mutual fund. Low cost, high margins, and recession-proof.

Personally, my money's in dope.
posted by norm29 at 1:10 PM on September 3, 2002

yeah, what's a kilo of heroin going for nowadays in the dope futures market at the CBOT? keke :) through the roof!
posted by kliuless at 1:17 PM on September 3, 2002

me3dia: There were all sorts of questions being raised about GE earlier in the year, if I remember correctly. Questions as to whether the company was overleveraged, over-diversified, etc.
posted by raysmj at 1:18 PM on September 3, 2002

The way things are going these days I'm searching for a fund that shorts stocks.
posted by euphorb at 1:22 PM on September 3, 2002

Raysmj: Most of that seems to have blown over, and much of the controversy, I think, was fed by worries that the company would fall apart after Jack Welch left.
posted by me3dia at 1:36 PM on September 3, 2002

me3dia: The reason this fund is a bad idea hinges not on whether these individual industries have performed well, but rather on the idea of limiting yourself to a very narrow range of investment opportunities for what is, ultimately, a gimmick (or, to be kind, a non-economic reason). If investors should have learned anything over the last five years, it's that diversity is the best hedge against loss. remember all those people who scoffed when the naysayers said too much money in high-tech stocks was a bad thing? Many of those people are either in jail or living with mom and dad. Numbers can be twisted in lots of ways; investing principles can't.
posted by risenc at 1:47 PM on September 3, 2002

Oh, and by "private prison outfits," I meant companies like CCA, not "clothing worn in private prisons." CCA, by the way, is a great investment, for those lacking a soul.
posted by risenc at 1:49 PM on September 3, 2002

Two words: Tattoo Removal.

There's your growth industry for when people your age start getting to be my age. But is there any way to invest in it?
posted by y2karl at 1:56 PM on September 3, 2002

Risenc, I'm a personal finance writer, I'm very aware of the value of a diversified portfolio. For your edification, I will hereby clarify for everyone of the point you're trying to make:

Caution: If you invest in this mutual fund or any other, be sure to insure diversity in your portfolio by investing in other vehicles with different holdings, or else risk severe losses should this fund perform poorly.

This is far from a non-diversified investment, but we could go back and forth on that all day. It's certainly more diversified than a high-tech fund, considering no two industries included in it are economically interdependent (unless you consider all the smokers who "only smoke when they're drinking"). Considering we can't know until October 3 what stocks the Vice Fund holds (they can't disclose that for one month after creation of the fund), we'll just have to wait and see how its diversification stacks up against similarly sized socially responsible counterparts.

When it comes down to it, the only truly diversified mutual fund is an index fund. Anything that doesn't track the entire stock market is, by its nature, less diverse than optimal.
posted by me3dia at 2:42 PM on September 3, 2002

I'm a personal finance writer

Do you always characterize socially responsible investment funds with the kneejerk term "PC"?
posted by mediareport at 3:07 PM on September 3, 2002

Pointing out that things are so 1999 is so 2000.

As a member of the Nation Association of Professional Psychics, I can verify that pointing out that things are so 1999 is so 1995.
posted by Hildago at 3:08 PM on September 3, 2002

The way things are going these days I'm searching for a fund that shorts stocks.

You're in luck, euphorb. Lots more about bearish funds in this July thread.
posted by mediareport at 3:10 PM on September 3, 2002

The idea behind SRI (Socially responsible investing) is that, like it or not, you're endorsing the behavior of every company you invest in. The point is to invest in companies whose behavior you want to encourage.

You can invest in rabidly right wing causes and still be "socially responsible", as a lot of churches do. (The Aquinas Fund springs to mind.)

I am rabidly left wing but enjoy my whisky and I don't disapprove of what I know of the whisky business. I'm happy to invest in them.

Sorry if every one knows all this, but the PC crowd has taken over SRI where I live. They act as though to be socially responsible is to toe their party line and they forget that a huge segment is fundamentalist Christian. (Anyone have stats on that?)
posted by small_ruminant at 3:17 PM on September 3, 2002

me3dia: You seem to be mistaking me for someone who would criticize the Vice Fund in contrast with socially responsible funds. Neither, in my mind, is an optimal way to invest, because both restrict investments based on non-economic reasons. What is it that determines the companies the Vice Fund can invest in? Their "un-PC" status. And it's not that their un-PC status makes them good investments; it just happens to be the alcohol, tobacco, etc. are good investments (that is, people would smoke and drink regardless of those activities' cultural acceptance). The same could be said of all sorts of industries that are less un-PC, but the fund doesn't invest in those. Compare that to high-tech funds, which are also limited but limits themselves based on an economic reason.
posted by risenc at 3:24 PM on September 3, 2002

Lots more about bearish funds in this July thread.

Thanks for the info. Read the thread, didn't follow the links. That fund has done amazingly well the past couple years.
posted by euphorb at 4:10 PM on September 3, 2002

Evidence: Dow dropped 355 points today (4%). Rick's Cabaret (a chain of strip clubs) was up 2%...
posted by owillis at 8:08 PM on September 3, 2002

Do you always characterize socially responsible investment funds with the kneejerk term "PC"?

I never used that term; that was risenc. Point that knee-jerk finger somewhere else.

---

What is it that determines the companies the Vice Fund can invest in? Their "un-PC" status. The same could be said of all sorts of industries that are less un-PC, but the fund doesn't invest in those.

As I've pointed out before, we have no idea what the fund will specifically invest in, just the general categories. I don't think you're against this fund on partisan grounds. Your argument -- that a narrow-focus fund is an unsafe investment -- is sound. But it's only risky if it's the only investment you make. The only mutual funds that aren't diversificationally challenged are index funds. That doesn't mean a narrow-focus fund can't be part of your well-balanced investment breakfast. You just have to include other investment vehicles that mitigate the risk.

As for your objection to the fund's make-up, what's your point? The industries included are un-PC, yes, but that seems secondary to the performance of those industries. The non-PC aspect of the industries is a great marketing ploy, but if the stocks didn't perform well, the fund won't be around long. When tech stocks were going through the roof, did you decry tech funds as all gimmick no substance? So what if the fund managers play up the vice thing, as long as the fund makes money.

If we were to suddenly realize that the companies of MetaFilter members consistantly did better than the S&P, and created a MeFi Fund, would you protest? As long as the fund does well, I don't care what marketing gimmick the management company uses.
posted by me3dia at 9:11 PM on September 3, 2002

From that quote up there in my post:
"these and similar industries and products...will continue to experience significant capital appreciation during good and bad markets."

So maybe your prison uniform company and owillis's porn'n'strippers will get into the fund at a later date...or maybe they're already there.
posted by me3dia at 9:20 PM on September 3, 2002

I never used that term

???

Um, you started the thread with it. But I'll cop to being oversensitive; you were one of at least three people who used it here during the last two days, which surprised me. I thought it was long ago relegated to the ashcan of history in intelligent discussion. I can't think of a single time I've seen it used that it didn't obscure more than it revealed.
posted by mediareport at 10:39 PM on September 3, 2002

But the reason for their inclusion in the fund seems to be less their financials than their relevance to the fund's marketing schtick. Look, to an extent you're right - the point, and the debate, is moot until we find out just where the fund is sticking its money. All I'm saying is that I am wary of a fund that banks on the "un-PC" quality of its investments. Whether or not those investments are sound is a question for the future, but the look of the site and the tone of the text leads me to believe these guys are in it more for the gimmick factor than sound numbers (granting, of course, that we won't know for sure until we see their performance).
posted by risenc at 7:46 AM on September 4, 2002

Mediareport, I completely forgot that I used the term in my headline; my apologies. I added the headline as an afterthought, and since the fund is self-described as anti-PC, I just followed their lead.

Risenc, I think the fund managers are banking on prospective shareholders will be in it more for the gimmick factor than sound numbers. There's little money in a fund that won't perform, especially in a market like the current one. We'll just have to see.
posted by me3dia at 9:15 AM on September 4, 2002