A vice fund is a type of mutual fund that takes the opposite approach to socially responsible investing. With this type of fund, fund managers invest in a variety of stocks from companies that are considered to be vice stocks. Here are the basics of the vice fund. 

Vice Fund

This is a type of mutual fund that attempts to create a diversified portfolio of vice stocks. These stocks are from companies that are considered to have negative consequences to the rest of society. For example, a vice fund might invest in companies that produce beer and tobacco. Other common stocks that are held in vice funds are stocks from defense companies and weapons manufacturers. Sometimes, these funds will also invest in casinos or other companies that feature gambling as one of their main revenue sources. 


It takes a special type of investor to get involved with this type of fund. In order to invest in a vice fund, you have to be fine with investing in companies that are considered socially irresponsible. These companies have a negative impact on society, and when you invest in them, you are essentially furthering their cause.

Many investors do not care where their money goes as long it brings them a return. These investors value returns over anything else. They argue that someone else would invest in these companies if they did not, so they might as well take advantage of the potential returns.


Many studies have been conducted on the effectiveness of investing in vice funds. While the industries that are included in vice funds tend to be very profitable, the performance of the funds is usually not that much better than other types of funds that do not invest in vice stocks. Because of this, many individuals have called into question the validity of having vice funds. 

The good thing about investing in vice stocks is that they tend to be very consistent. They will usually not go through big periods of growth because the businesses are already well established. However, they usually will not decline in value much either. These industries tend to do well regardless of the economy and regardless of how other industries are performing. 

For example, many people who gamble, drink and smoke will do so regardless of how much expendable income they have. They will find ways to pay for these addictions, and the industries will keep being profitable.


One of the disadvantages of investing in this type of investment is the costs involved. The fund will benefit from a professional money management team that is in charge of making the investment decisions for the fund. In order to compensate the fund manager, the fund has to charge investors a certain amount of money in the form of an expense ratio. This expense ratio can cut into the amount of profit that is generated by the investments in the fund. 

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