Vice Fund

Vice Fund — Overview and How It Works

The Vice Fund (formerly the Vitium Global Fund) is an open-end mutual fund managed by USA Mutuals that concentrates on companies in so-called “vice” industries—businesses often viewed as socially irresponsible. It has operated since 2002 and invests in both U.S. and international equities across market-cap ranges.

What the fund invests in

The fund focuses on companies that generate a majority of revenue from:
* Alcohol producers
* Tobacco companies
* Gaming and casino operators and equipment manufacturers
* Defense and defense-equipment manufacturers

Holdings are drawn from small-cap to mega-cap companies and include both domestic and foreign issuers. Historically, top holdings have included firms such as Galaxy Entertainment, Northrop Grumman, Raytheon Technologies, and Philip Morris International.

Investment strategy

Key elements of the fund’s approach:
* Emphasis on dividend-paying stocks with positive cash flow to provide income to investors.
* A belief that vice industries have significant barriers to entry, which can support predictable cash flows and returns.
* Broad international diversification intended to reduce sensitivity to any single market.
* A view that demand for vice-industry products tends to be steady across market cycles, helping the fund perform in both up and down markets.

Share classes and fees

The Vice Fund offers multiple share classes:
* Investor and institutional shares — no sales loads for these classes.
* A-shares — charge a front-end sales load (commonly 5.75% through full-service intermediaries) and a possible 1% back-end load.
* C-shares — typically include a contingent deferred 1% back-end load if redeemed within 12 months of purchase.

Fee structure (typical figures):
* Management fee: 0.95%
* Net annual operating expenses: approximately 1.24% to 2.24% (varies by share class)

Funds can be purchased through full-service or discount brokerages, depending on the share class.

Performance and assets (historical snapshot)

(Reported figures are historical and should be checked for updates before investing.)
* In operation since 2002.
* Five-year annualized return (Investor Class): 0.74% (through June 30, 2022).
* Ten-year annualized return (Investor Class): 6.79% (through June 30, 2022).
* Annualized return since inception: 7.82% vs. MSCI All Country World Index benchmark ~8.32% (through June 30, 2022).
* Dividend yield and assets under management were reported at 0% and $79.2 million, respectively, as of early September 2022.

Considerations for investors

• Sector concentration: The fund is heavily concentrated in vice-related industries, which can increase sector-specific risk and make performance sensitive to regulatory, tax, or social trends.
• Ethical factors: Investors concerned with environmental, social, and governance (ESG) goals may find the fund’s focus inconsistent with socially responsible investing.
• Fees and share-class choice: Expense ratios and sales loads vary by share class; compare classes and distribution channels to minimize costs.
• Market and regulatory risk: Tobacco, gaming, alcohol, and defense sectors face regulatory and reputational risks that can affect returns.

Bottom line

The Vice Fund targets income-producing companies in vice industries, relying on steady demand, dividends, and international diversification to generate returns. It may suit investors seeking exposure to alcohol, tobacco, gaming, and defense sectors who are comfortable with concentrated, non-ESG-aligned investments and willing to evaluate share-class fees carefully. Always review the fund’s most recent prospectus and performance data before investing.