Vice Fund Founder Bets On Gaming

Less than six months after bolting from the fund that made his name, Vice Fund founder Dan Ahrens is back with a new socially irresponsible venture. Ahrens' new firm, Dallas-based Ahrens Advisors, has filed a preliminary prospectus with the Securities and Exchange Commission for the Gaming and Casino Fund, which he will manage.

As the name suggests, the new fund focuses on one of the four areas represented in the Vice Fund, with at least 80% of the Gaming and Casino Fund's assets invested in about 40 to 50 of the names in its namesake sector, mostly in blend and growth stocks. Up to a 25% of the fund may be invested in foreign securities.

That quarter may prove important for the fund's returns, says Deutsche Bank gaming analyst Marc Falcone. "The global outlook for the gaming industry is great," he says. "The United States is a relatively mature marketplace, and it's difficult to find the growth rates that have previously existed. There are unique opportunities in the U.S., but there could be more exciting opportunities globally, in the U.K., in Asia, online."

The $45 million Vice Fund, known for its strategy of investing in alcohol, defense, gambling, tobacco and weapons, in spite of a recent rough patch, boasts a better than 25% three-year annualized return, mostly under Ahrens' stewardship, which ended Sept. 7. Ahrens told InstitutionalInvestor.com in December that his departure was precipitated by "disagreements with the control people" at the fund's adviser, Mutual Advisers. Three Mutual executives were indicted on market-timing charges in 2004, though neither the Vice Fund nor Mutual Advisors itself have been implicated.

Ahrens' new fund will charge an expense ratio of 170 basis points. Though relatively high, it's still 5 bps lower than the Vice Fund, indicating that there is no love lost between Ahrens, the author of the book Investing in Vice: The Recession-Proof Portfolio of Booze, Bets, Bombs, and Butts, and Mutual Advisers. The minimum initial investment is $5,000, twice that at Vice.