This post may contain affiliate links, which means if you click through and purchase something using my links, I receive a small commission. You can click here to read my disclosure policy ? Thank you!
I’ve made it one of my goals to invest more, as I learned that instead of owing the government, I could have just invested more in my IRA account. Since that debacle, I’ve made it these year’s goal to increase the amount I invest – beyond what I save for my emergency fund. Luckily, my emergency fund is going well, as is saving (and planning for) the wedding, so I think I’ll be able to actually invest some money by the end of this year! (FYI – I do invest normally through paycheck deductions at work, lest you think I’m not saving anything for retirement. I save 10% of my income that way!) I’ve been looking at the best stocks to buy according to Stocktrades for a while however a friend recently told me about Sin Stocks.
While researching mutual funds I’d like to invest in (because investing in single stocks makes me a little too nervous right now), I came across “sin stocks”. What in the world are sin stocks? If you’re like me, they sounded fun and intriguing! I like to pretend I live on the wild side 😉 If you thought the same, we’re on the right track. They’re certainly… exciting stocks, to say the least. But are they good for the average investor? Either way, you’re going to need a stock portfolio tracker before you even consider investing in these. Track your profit/loss, and keep an eye on them at ALL times!
Sin Stocks: Definition
Also known as “vice stocks” or “vice funds”, these stocks are things most people find morally wrong, or at least questionable, like guns, alcohol, tobacco, and the military (not saying the military is morally wrong! It’s just a broad definition).
According to Investopedia, sin stocks are “a stock of a company either directly involved in or associated with activities widely considered to be unethical or immoral. Sin stocks are found in sectors whose activities are frowned upon by some or most of society, because they are perceived as making money from exploiting human weaknesses and frailties. Sin stock sectors therefore include alcohol, tobacco, gambling, sex-related industries, weapons manufacturers and the military.”
While you can pick and choose your sin stocks, like investing in Anheuser Busch, you can also choose a mutual fund comprised of all the various sins. This fund is the Vice Fund (now called the Barrier Fund, but I’ll refer to it as the Vice Fund for this post). According to the description, the Vice Fund derives a significant amount of revenue from products “often consider socially irresponsible.”
Are Sin Stocks Profitable?
Like all mutual funds, the Vice Fund chooses companies to include in their fund in order to maximize profits and minimize losses. They’re not picking tobacco companies willy-nilly just because they’re “sinful”. Rather, the Vice Fund is picking these companies because, let’s face it, when times are tough, people’s vices don’t just magically go away. If anything, alcohol and smoking may increase when people are faced with stress or adversity – and by buying more alcohol or tobacco products, this increases the profits of the companies selling those products.
The Vice Fund certainly doesn’t fall in with the socially responsible investing crowd. After the Newtown, CT school shooting, the Vice Fund invested more in weapons manufacturers, betting that talk of gun regulations would spur a rush of gun purchases. This strategy, while unsavory to many, has been paying off. According to Fox Business, the Vice Fund, “VICEX posted a 16.59% gain from 2009-2012, topping the S&P’s 10.66% climb.”
Currently, the Vice Fund’s top 3 investments are in tobacco companies and Raytheon, a defense contractor that manufacturers weapons and military electronics. The Vice Fund’s top holding is in Lorillard Inc, an electronic cigarettes manufacturer – likely betting that teens, who use e-cigs more than traditional cigarettes, are a longer lasting (and potentially growing) market.
So Are You a Sinner?
While I initially thought the Vice Fund sounded somewhat fun and edgy (after all, some of their holdings include casinos, like the Wynn, which I don’t have a problem with), I do have some qualms with it. I wouldn’t say I’m the most socially responsible person out there, but I just… don’t like cigarette companies. Personally, I think cigarettes are gross, so why would I support a fund that has holdings in cigarette companies?
Yes, I know that when you purchase mutual funds, you can’t be completely picky about every single holding. This doesn’t mean I’m going to go out and actively look to be extra sinful! However, I do understand the appeal. I suppose I could pick sinful stocks I like, like the casino stocks, and make my own sinful portfolio…
Would you ever invest in the Vice Fund, or would you/have you purchased any sinful stocks? What do you think of the idea of vice or sin stocks?