"Ethical fund managers don′t have to be envious of the market-beating returns of so-called sin stocks. They should be able to match them without dabbling in vice, according to a study in the Fall edition of the Journal of Portfolio Management. The study debunks the popular theory that shares in the alcohol, tobacco, gaming, and weapons industries outperform because investors shun them, enabling those with fewer moral scruples to earn a ’reputation risk premium.’”
[COMMENTARY] So ’sin’ stocks only outperform if their profits and investment also outperform. This is an important message, but one I feel will take time to be accepted. Nonetheless, for ethical investors, it’s heartwarming to see the results of this study.
Also, as government health care costs continue to explode, many sin sectors such as tobacco and alcohol will continue to be taxed higher and higher, thereby continually eroding the profitability of companies in these sectors. Thus, their future outperformance becomes questionable. See actual studyhere.
Investors Can Be Ethical and Still Beat the Market, Study Says, by Cormac Mullin, September 11, 2017, Bloomberg, USA.