Anheuser-Busch is Vice Fund’s top pickNovember 2002
Drinks company Anheuser-Busch has emerged as the biggest holding in a fund that champions ‘socially irresponsible investment’.
The US-based Vice Fund holds six per cent of its investments in the company, which brews Budweiser beer. That puts it ahead of British American Tobacco (4.4 per cent) and Lockheed Martin (3.9 per cent) in the fund’s top ten holdings.
The fund, set up by investment adviser Mutuals.com, makes a point of investing only in ‘sin stocks’ such as tobacco companies, arms manufacturers and firms linked to alcohol and gambling.
Half of its investments are in the alcohol and defence sectors, while gambling and tobacco account for a further 40 per cent of its holdings.
The Vice Fund’s prospectus states: ‘It is our philosophy that although often considered politically incorrect, these and similar industries and products ... will continue to experience significant capital appreciation during good and bad markets.’ It claims that far from being risky, such sectors are ‘nearly recession-proof’.
The Vice Fund is not the first to target sin stocks, although it claims to be the only one to do so exclusively. The Morgan Funshares fund launched in the US in 1995 invests largely in tobacco, alcohol, gaming and defence companies, but has also taken holdings in media businesses such as AOL Time Warner and ‘consumer-oriented’ companies such as Coca-Cola.
The US-based Money magazine recently calculated that the Funshares fund has underperformed the Dow, S&P 500 and Nasdaq indices since it opened.
The top three holdings in the Vice Fund also appear in the two best-known SRI indices. Anheuser-Busch, which is the world’s largest brewer, and Level 3 Communications are in the FTSE4Good US index while British American Tobacco is in the Dow Jones Sustainability World Index. Harrah’s Entertainment, the Vice Fund’s sixth-largest holding, is in both SRI index families.
The four companies account for nearly 18 per cent of the value of the Vice Fund.
Mutuals.com itself points out that since 1982 Anheuser-Busch has spent more than $375million (£240m) on responsible drinking programmes in the US.
The firm publishes an annual environmental report and is the world’s largest recycler of aluminium cans.
Amy Domini, founder and chief executive of the US-based socially responsible investment firm Domini Social Investments, said the Vice Fund appeared to be cashing-in on ‘desperate’ investors trying to find a way to outperform the weak equities market.
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