Sinful mutual funds is a term that describes a mutual fund that invests in questionable companies in the market. Many investors have an issue with these types of funds, but they can provide a high return on your investment under the right circumstances. Here are the basics of simple mutual funds and what they mean to you as an investor.

Sinful Mutual Funds

One of the most popular forms of mutual fund in today's market is the socially responsible mutual fund. This type of fund aims to invest only in companies that help the world in some way. Nearly the exact opposite of that is what makes up a sinful mutual fund. These funds invest in areas that many would find morally objectionable. For example, they might invest in casinos, alcohol companies and tobacco companies. It could also involve companies that use questionable business practices, such as child labor or something along those lines. The funds are made up of stocks from companies that conduct some type of offensive business practice.

Leisure Funds

The leisure fund is one of the more diversified types of simple mutual funds. While they invest in some morally objectionable companies, they also diversify over other industries as well. For example, in a leisure fund, you might find holdings from several casinos as well as holdings from a theme park or restaurant. Therefore, they contain securities from anything that could be considered a leisure activity and do not solely focus on sinful activities.

Vice Funds

Vice funds, on the other hand, do focus solely on the more sinful activities. For example, many vice funds will invest strongly in casinos, alcohol, tobacco, defense and other similar industries. While this can provide a larger turn for the investors, it is also much less diversified than a leisure fund. Therefore, this type of fund is subject to large price swings from time to time.

Benefits Of Sinful Mutual Funds

This type of fund, although morally reprehensible, can provide investors with some benefits. These funds have historically performed well and can help grow the portfolios of investors. Investors of this type of fund, do not necessarily believe in the sinful activities, but they do believe in the economic opportunities that come as a result of them. They know that someone will always be taking advantage of this market, so they figure it might as well be them.

Another advantage of this type of fund, is that these vices are not subject to the downturns of the rest of the economy. When times are bad, many people still turn to alcohol and tobacco. Tobacco companies always tend to do well, because it is so difficult for people to stop smoking. Therefore, they have a faithful set of customers that will be buying cigarettes for life. As an investor, this represents some nice stability for your portfolio.

Investment Decision

Sinful mutual funds represent a viable choice in the mutual fund industry that. However, you will have to weigh this against your personal beliefs before purchasing shares.

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