Sin stocks pay off for investors

It may not be politically correct, but we all know that sex sells - and the same goes for drugs, alcohol, tobacco and gambling. A British stockbroker, Richard Craven, is preparing to introduce a fund this summer that will capitalize on investment opportunities in the so-called sin sectors. "We all know that there is no such thing as a perfect company," said Craven, who heads the Money Portal Group in London. In Craven's view, there is nothing fundamentally wrong with gambling and tobacco and alcohol use in a free Western society: "To suggest otherwise would be patronizing." It is clear that sin stocks deliver. Since the information technology bubble burst five years ago, an investment in the U.S. tobacco sector would be worth 85 times more than an equivalent investment in IT hardware, according to Standard & Poor's data. Liquor companies also have plenty to celebrate. The Standard & Poor's distillers and vintners index rose 18 percent in 2004, compared with a rise of about 9 percent for the S&P 500. Through the end of March the beverage index rose 14 percent, compared with an increase of less than 1 percent for the S&P 500. Craven's fund will have a similar profile to the Vice Fund, which was started in 2002 and is managed out of the United States by Dan Ahrens. The fund, available only to U.S. investors, invests in alcohol, gambling, tobacco, aerospace and defense - sectors that Ahrens said should do well in good times and in bad. Lipper Analytical Services ranked the Vice Fund in the top 1 percent among 728 multicap funds for the year to March 31. Over the period under review, the fund returned 16 percent, easily outperforming the S&P 500, which rose 6.6 percent. As well as holding large-cap value companies like Diageo and Anheuser-Busch, Ahrens holds growth stocks like Central European Distillers and Constellation Brands. Among the military contractors Ahrens favors are Lockheed Martin and United Technologies. Craven said that he hoped the British vice fund, which should open over the summer and be available to sterling and euro investors, would appeal to the man in the street. Of course, that assumes that Everyman would not rather take his minimum investment of £1,500, or $2,725, and spend it on cigarettes, beer and poker. sources Vice Fund. 1 866 264 8783 Money Portal Group. 44 0113 295 5955