Not to diminish the terrible effects of Hurricane Katrina on New Orleans, but it did have an unheralded effect: It drove down the performance of the Vice Fund, a mutual fund specializing in “booze, bets, butts, and bombs”.
The Vice Fund has achieved a type of folk figure status in the otherwise staid world of mutual funds. Boasting an annualized return of more than 20% over the last three years investing in nefarious industries that make the more politically correct among us squeamish, the fund has mostly enjoyed enviable success. But the last few months have produced volatility unusual even for a fund focused, as its former adviser liked to say, on “booze, bets, butts and bombs,” along with less-than-stellar returns.The troubles began at the end of August when the $45 million fund, which throughout its three-year history has enjoyed robust returns, received two big hits. On Aug. 29, Hurricane Katrina devastated the U.S. Gulf coast, sending shudders through the gaming industry, the Vice Fund’s largest sector as of Sept. 30 at better than a quarter of its assets.
Let that be a lesson to all proponents of economic clusters and regional center of excellence.
Related posts: