Screw the ESG data, but just take a look at the moral (offtopic) side though: you’re profiting from companies that thrive off giving a carcinogenic addiction to people. I could personally never put any money in that. Same as the defense sector, but Lockheed Martin is probably responsible for way fewer deaths than Altria over the last 50 years.
That said, thanks for the insights, your data and tool selection. Will definitely take a look.
I’ve been using SimplyWall.st, but it’s less actionable than I like - although maybe I’d need much more time to devote to stock picking.
I used to think the same way for the better part of my life. I even gave up a PhD once partially because I found out it was sponsored by a defence contractor.
I changed my mind on tobacco when my son came of age and wanted to try out all these products they sell. Companies aren’t giving this stuff to people. People want to buy that stuff.
Also look at Altria’s company motto: “Moving Beyond Smoking” (ok, ok, I don’t believe them, either, but it’s front and center on their homepage).
As for the defense sector: when there’s a war raging a day’s drive from here, stuff they make at Lockheed does come in handy (if you’re rooting for Ukraine).
Anyhow, probably slightly off topic and a question everyone needs to answer for themselves.
Glad we agree on ESG, though.
Thanks for sharing SimplyWall.st - I wasn’t aware of them!
I mean, if you buy a couple of tobacco shares from me over a stock exchange, you‘re putting money into me. Not the tobacco company. And the effect on the demand, supply and price of their shares will be negligible.
Rather than putting money „into“ the business, you will receive it from, out of that business by way of dividend distributions.
of course it’s a secondary market, so you’re not giving your money to Altria, per se. But you’re owning a bit of their business, so from that point onwards (and sorry if this is a too tall moral high horse), you’re partly responsible for all that death. Same goes for the defense sector for someone that might be a hardliner pacifist. Also, much of their senior management is paid in RSU, so in the end the demand side of things does influence the dollar value of their bonuses.
of course. same goes for cocaine, crystal meth and all the other fancy stuff. at one point, state regulations will need to be stronger before people will kill themselves for fun. So any tobacco ban on youth can not come early enough.
I’m gonna stay on the moral high horse and will not touch the tobacco sector with a stick, either giving them or other people money for their stock. My choice, my loss. (same as with CSX )
I’m actually frowning Fundsmith a lot for their PMI position as well.
Technically, you can still own them, I believe. However, …
A new 10% withholding tax is imposed on distributions made by these companies. The new withholding tax doesn’t fall under the double tax treaty and therefore you won’t be able to claim it back when filling out tax returns. You’ll still pay the full Swiss income tax on the distribution (no 10% deduction).
Additionally, you’ll pay 10% tax (to the IRS) when you sell the company (regardless whether you made any gains or losses).
Are you self-employed? If not, care to elaborate a bit more? I’ve never heard of a pure money market 2nd pillar and I think it’s a bad choice in the long term.
I’m employed and thus, it’s not like I have a choice
We had a long-term provider that was a fix 1% or similar with zero equity exposure (usual safe 2nd pillar choice) - might have not been “money market” but something very stable and planable.
From this year onwards we have some equity exposure but it’s also very minimal - don’t know how much exactly - the details are very much not transparent for pension schemes in Switzerland.
Which provider was that?
That sounds more like they pay out the mandatory 1%, but I’m almost sure that they invest in equities etc. in the background, otherwise this pension fund would be already bankrupt.
Not sure if you’re trolling, @user137 … but MSCI Quality indexi do hold the comanies you want to avoid. Here’s e.g. an excerpt of the constituents of the MSCI Quality Factor index, fresh and straight from Bloomberg:
Your Lockheed Martin holding of 1.87% is almost as big as my defense holding (2.19%, includes General Dynamics).
In case you’re not holding MSCI Quality Factor in 3a: I’m fairly sure other MSCI Quality indexi also hold Defense (and Tobacco) companies.
I’ll admit, though, that I ride a high horse, too. The company I would not hold even if it paid a reliable and growing 20% dividend: META.
I believe they do far more worse to the world, especially the youth, than Defense and Tobacco companies combined (the irony, though: like you involuntarily owning Defense and Tobacco, I’m afraid I hold META via funds in retirement accounts).
On a tangent, but related to this everything-is-connected theme: if you want to avoid Defense, wouldn’t you need to avoid the Tech sector as well? Or at least the subsector Semiconductors? Electronics made of semiconductors crucially enable the modern Defense sector to exist in the first place.
See also the Russian Defense (well, maybe it’s more Offense) industry / arsenal struggling as access to high tech from the West is drying up, ditto for drones made in Iran (and supplied to Russia) which (seemingly, in their core technology) consist mainly of Western electronics and semiconductors.
I know I am hypocritical here, as I would have to shun Tech as well, as they enable META, very crucially.
Maybe my high horse is just a pony.
Here’s your Tobacco & Defense horse looking at my META pony:
What @Burningstone sayd: this is a result of the mandatory minimal 1% Verzinsung, not a result of their investment returns.*
Working for an asset management company that offers products mainly to institutional investors (like pension funds), I can assure you your pension fund owns a mix of diversified equity (stocks) and fixed income (bonds) assets, almost all of them long duration (years, even decades) across thousands of individual companies (including all sectors and industries, according to their clients’ wishes excluding certain companies, but mostly not) and governments (for bonds).
Their balance between equity and fixed income is determined by what they have to pay out as pensions now and soonish versus how they can take more risk (usually equity) for more return for folks who will reach retirement age further out (5, 10, 20, 30 years).
* BTW, you’ll get that minimal 1% Verzinsung for 2022 despite the equity markets tanking neary 20% and the bond markets tanking high single digits. 1% looks minimal, but it’s guaranteed positive.
Your pillar 2 from an end user POV beat the market by double digits last year.
Defining the terms:
MSCI provides the index and its constituents, asset managers (like Blackrock/iShares) implement actual portfolios (usually sticking to their index of choice modulo some usally small tracking error).
Looking at iShares’ represenation of what looks like the same (?) ETF I referred to via the Bloomberg screenshot, IWQU, I could have sworn that Altria was part of their mix when I last checked, but no longer today. Easily true that Tobacco wasn’t ever part of the MSCI Quality index, too - though I personally find that hard to believe.
Thanks for pointing out the discrepancy.
If I was a Bloomberg terminal disc jockey, I’d overflow you with information of when Tobacco was first & last included, respective weightings, etc, but - alas - I don’t know the corresponding Bloomberg terminal commands.
(Of course, if Tobacco was never included in any MSCI Quality index, I’d deflect to a different topic).
Anyway, apologies if I completely mixed up things. I’ll downgrade my pony to Pumuckl size.
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