Why Exclusions Don’t Have to Mean Sacrificing Performance

September 27, 2019

In our industry, investor professionals will often state that excluding a group of stocks, such as for example tobacco stocks, is both difficult and costly and will adversely affect the investment portfolio. Nonetheless, because tobacco stocks are detrimental to health, some investors prefer that they should not be included in their investment universe.

Normally investment exclusions are based on breaches of international norms and conventions, where the risk of an event/ or the recurrence of an event or a controversy is high. In some cases, exclusions can also be product based. The most common examples are the production of controversial weapons and tobacco, as well as breeches of international norms, like human rights or corruption. Exclusions motivated by climate change are also on the rise. In this thought piece we will focus on tobacco. Download PDF