Sunday, July 17, 2011

Weird, Weird, Weird World's Deep Thoughts: The Wages of Virtue and Vice

See folks, according to the NY Times, vice and virtue are engaged in a titanic struggle on many fronts, and vice often appears to have the upper hand. Just read the headlines. Scandals in politics, sports, business and journalism seem to be popping up everywhere. But how reassuring it is to see virtue beating vice in at least one statistically verifiable contest — mutual fund performance.

There, at the top of the charts for general domestic mutual funds published in Sunday Business last week, was a fund that wears its virtue on its sleeve: the Virtus Small-Cap Sustainable Growth fund. The Virtus fund gained 8.43 percent in the three months through June, making it No. 1 for the second quarter of 2011.

If your Latin is rusty, “virtus” is a form of virtue, specifically the “kind of integrity and strength” that was prized in the ancient Roman republic, according to Joe Fazzino, a spokesman for Virtus Investment Partners, the fund’s parent company, a 2008 spin-off from the Phoenix life insurance group in Hartford, Conn. “When we rebranded, we chose the name ‘virtus’ to emphasize those qualities.”

But if mutual fund branding is a kind of morality play, this is no time to be complacent. Vice is nipping at virtue’s heels. Second on the mutual fund list stood the Vice fund, which was founded in 2002 with the proud intention of devoting itself to “socially irresponsible stocks,” specifically those in the tobacco, alcohol, gambling and military industries. Dan S. Ahrens, the firm’s first manager (he’s now executive vice president of AdvisorShares, a sponsor of exchange-traded funds) said he realized that these “vice stocks” were “nearly recession-proof.”

The strategy has been working. The Vice fund gained 6.64 percent in the second quarter. Over the 12 months through June, it returned 39.32 percent, compared with 39.39 percent for the Virtus fund....

http://www.nytimes.com/2011/07/17/your-money/mutual-funds-and-etfs/in-mutual-fund-performance-vice-battles-virtue.html

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