REGRETTABLE though it may be, the wages of sin can be well worth having. Vice Fund, a mutual fund started 14 months ago by Mutuals.com, a Dallas investment company, is profiting nicely from what some would consider the wickedest corners of the legitimate economy: alcohol, arms, gambling and tobacco. So far this year, Vice Fund has returned 17.2% to investors, beating both the S&P 500 (15.2%) and the Dow Jones industrial average (13.2%) by a few points.

In fact, all four vice-ridden sectors have outperformed the overall American market during the past five years. "No matter what the economy's state or how interest rates move, people keep drinking, smoking and gambling," says Dan Ahrens, a portfolio manager at the self-described "socially irresponsible" fund. With President George Bush pursuing a muscular foreign policy, the outlook for defence spending is also bright.