Abstract

In this article, we empirically test the extent to which the VICEX fund, a portfolio of companies benefiting from
human vices (i.e., alcohol, gambling, and smoking), outperforms a variety of benchmarks. One pair of
benchmarks consist of Vanguard’s 500 Index Fund and a portfolio of all funds in the same Morningstar style
category based on company size. On a more focused basis we compare the performance of the VICEX fund to
two popular dividend-oriented mutual funds, because of the propensity of several VICEX fund components to
offer large dividend yields. Using a wide array of return, risk, and risk-adjusted measures we find limited
support for human vice-based investing over an extended period of time. Over the recent 2008-2009 period, the
VICEX fund has underperformed these alternatives.

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