If Your Choice Is Vice or the S&P 500, Bet on Vice

In yesterday's "SSRN Paper: 'Time-Varying Fund Manager Skill'" I promised we'd be coming back to Imperial College London's Professor Marcin Kacperczyk. Professor K, along with Princeton's Harrison Hong wrote a paper which we noted in a 2007 post "Moral Judgment On 'Sin Stocks' Means Higher Returns For Vice-Friendly Investors".

The paper "The Price of Sin: The Effects of Social Norms on Markets" is available here.
The thing that stands out is, if you use the VICEX mutual fund (1.37% annual expense) as a proxy for the tobacco, alcohol and war businesses, how reliably sin outperforms.

Here are the 6-month, 1-year, 2-year 5-year and 10-year charts vs. the S&P, via Yahoo Finance:

Six Month

One Year

Two Year 

Five Year

Ten Year
 

Just amazing that an anomaly should be so persistent.
I can't wait til they put the marijuana mavens in there.
And sexbots.
Get the whole country blissed out and the fund goes to infinity.Who needs Soma?
Here are the funds' holdings.

"the warm, the richly coloured, the infinitely friendly world of soma-holiday. 

How kind, how good-looking, how delightfully amusing every one was! "

-Aldous Huxley, Brave New World