🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

As We Head Into The Weekend, Here Are 2 ‘Sin’ Stock ETFs To Consider

Published 20/08/2021, 08:48

We finish the week by discussing two exchange-traded funds (ETFs) that could be appropriate for those looking to invest in so-called "sin" or "vice" shares. Such businesses typically focus on tobacco, alcohol, defence industries, gambling, marijuana and adult entertainment.

Market participants whose personal convictions permit them to invest in "sin stocks" could include them in diversified long-term portfolios. We should note that alcohol and tobacco stocks typically pay stable dividends.

With that information here’re our two funds for today.

1. AdvisorShares Vice ETF

Current Price: $30.97
52-Week Range: $25.42 - $36.86
Dividend Yield: 1.17%
Expense Ratio: 0.99% per year

The AdvisorShares Vice ETF (NYSE:VICE) invests in shares of vice businesses worldwide. This actively managed fund initially began trading in December 2017. In November 2020, however, it changed its ticker.

VICE Weekly

VICE has 38 holdings, where the leading 10 names comprise around 45% of net assets of almost $12.1 million. This means it is a small ETF with a high expense ratio.

The fund’s sector allocation by weighting is as follows: Gambling and casinos (30.5%), restaurants and hospitality (16.3%), alcohol (also 16.3%), video games and e-sports (13.5%), tobacco (6.5%) and others. Close to 90% of the firms are based in North America.

Among the top holdings are the gun companies Smith & Wesson Brands (NASDAQ:SWBI) and Sturm Ruger & Company (NYSE:RGR); gaming entertainment group Boyd Gaming (NYSE:BYD); real estate investment trust (REIT) Gaming and Leisure Properties (NASDAQ:GLPI), which leases property to gaming operators; and audio technology company Turtle Beach (NASDAQ:HEAR).

Mexico has recently filed a lawsuit in the US against 10 gun companies, including SWBI and RGR. Therefore, these names could be volatile in the weeks ahead.

So far in 2021, VICE is up 2.4% and hit a record high in June. However, since then it has come under pressure and shed about 14% of its value. Potential investors could regard this decline as a good opportunity to buy into the fund.

2. ETFMG Alternative Harvest ETF

Current Price: $15.88
52-Week Range: $10.12 - $34.58
Dividend Yield: 2.20%
Expense Ratio: 0.75% per year

Recent metrics suggest the “global cannabis market size was valued at $20.6 billion in 2019 and is reckoned to record a compound annual growth rate of 28.5% during 2021-2027 to accumulate $118.9 billion by the end of analysis timeframe.”

The ETFMG Alternative Harvest (NYSE:MJ) was the first US-based fund to invest in the global cannabis industry. However, since then it has widened its focus. Now, in terms of sectors, we see pharmaceuticals (51.5%) followed by tobacco (22.6%), home improvement retail (9.8%) and biotechnology (4.9%).

MJ Weekly

MJ, which has 32 holdings, tracks Prime Alternative Harvest Index. The fund started trading December 2015. The top 10 names make up close to 55% of net assets of $1.23 billion.

Canopy Growth (NASDAQ:CGC); Tilray (NASDAQ:TLRY), GrowGeneration (NASDAQ:GRWG); OrganiGram Holdings (NASDAQ:OGI) and Aurora Cannabis (NASDAQ:ACB) lead the names in the roster.

Just over 48% of the companies are based in the US, followed by 41.6% in Canada, where cannabis was legalized in late 2018. Many of our readers might know that marijuana is an agricultural commodity whose production is capital intensive.

Although legalization in Canada has provided tailwinds for the industry, many firms have nonetheless been dealing with supply-chain issues as well as the lack of sufficient demand. As a result, most of these Canadian producers are not yet profitable and continue to burn through significant amounts of cash.

These cannabis firms need to see federal legalization in the US for which there is no definite timeframe.

MJ returned about 28% in the past year, and 14% year-to-date. However, after seeing a multi-year high in February, MJ has come under pressure. Investors who believe the sector is likely to grow, especially upon federal legalization in the US, might consider researching the fund further.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.