Smoke-Free Your Strategy

Tobacco is a leading cause of cancer. And it may be in your portfolio.

Marco Caprotti 4 February, 2022 | 1:07AM
Facebook Twitter LinkedIn


“The true face of smoking is disease, death and horror - not the glamour and sophistication the pushers in the tobacco industry try to portray”, musician and former singer of Talking Heads, David Byrne is alleged to have said.

If you agree with him, and are an investor, you may not like the numbers that follow. On the occasion of World Cancer Day on February 4th, you may need to check your portfolio for a major cause of cancer – smoking – and therefore, manufacturers and brands of cigarettes.

The Morningstar Global Tobacco Index has gained 7.9% (EUR) since the beginning of the year (up to 21 January 2022). Over the same period, the Global Markets basket posted -5.4%. In 2021 the first benchmark marked + 20%. A result not too far from the + 26% recorded by the Global Markets index.

Morningstar Global Tobacco Index vs Morningstar Global Markets
Exhibit 1

Results that are not surprising. Tobacco, at least from a market point of view, is a growth story.
The Global Tobacco Market was valued at US$729.9 billion in 2020 and is expected to grow at a rate of 3.78% during the forecast period to reach US$908.29 billion by 2026.

But tobacco and smoking are a cause of cancer. According to the American Cancer Society,

  • -Lung cancer still causes more than 350 deaths each day, which is the highest number of deaths for all types of cancer—more than breast, prostate, and pancreatic cancers combined. It causes 2.5 times more deaths than colorectal cancer, the second leading cause of death from cancer in the US.
  • -About 8 out of 10 (81%) deaths from lung cancer in 2022 are expected to be caused from smoking cigarettes. Both the amount and how long someone smokes increase risk of dying from lung cancer. People who smoke are about 25 times more likely to develop lung cancer than those who never smoked.
  • -Second-hand smoke causes almost 3% of new diagnoses of lung cancer and is expected to cause about 3% of deaths from it in 2022.

In Canada, the Canadian Cancer Society says that tobacco use is the leading modifiable risk factor for disease and death, and more than 45,000 Canadian deaths are due to tobacco smoking each year. About 75% of lung cancer deaths in Canada are due to tobacco smoking.

Is Tobacco in my Portfolio?

To be honest, tobacco isn't very present in investment funds. At least at first glance, according to Morningstar data, tobacco is present in international equity, alternative equity, global equity and in some U.S. equity funds.

This table highlights funds available in Canada that have a weightage of more than 4.5% to tobacco. Of these funds, only one earns a Morningstar Quantitative Rating (MQR) medal. Here’s the list:  


Morningstar Category

Morningstar Star Rating


Tobacco %

Fidelity Global Value Long/Short F

Alternative Equity Focused




Fidelity Canadian Large Cap Class F

Canadian Focused Equity




CI Global Dividend Opportunities F

Global Equity




CI Global Eq Inc Pvt Pl Cl F

Global Equity




CI Global Equity Cl F

Global Equity




BMO International Value F

International Equity




Portland Focused Plus Series F

Alternative Equity Focused



GQG Partners International Quality Eq F

International Equity




Canada Life Pathways Intl Concntr Eq F

International Equity




Invesco Global Dividend Class Series F

Global Equity




SunWise Elite CI Camb GlEqCorBndlB75/75

Global Equity Balanced




Scotia Wealth US Value Pool F

U.S. Equity




Capital Group Capital Inc Bldr (Cnd) F

Global Equity Balanced




Invesco Global Companies Series F

Global Equity




Morningstar Direct Data as of January 26th, 2022

Capital Group Capital Income Builder (Canadian) F
A sound investment process and strong management team underpin Capital Group Capital Inc Bldr (Cnd) F's Morningstar Quantitative Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the second-cheapest fee quintile among peers. The strategy's investment process inspires confidence and earns it an Above Average Process Pillar rating. The management team's considerable industry experience earns it an Above Average People Pillar rating. The strategy is part of a first-rate parent, as shown by the firm's favourable lineup success ratio and a high average Morningstar Rating. These attributes support its Above Average Parent Pillar rating.

What Should Investors Do?

The suggestions are always the same:

  • If you are concerned about where your fund is investing, do your homework and check your portfolio holdings. Company sites have plenty of information.
  • Press releases and newspaper articles are also a good source of news about companies’ strategies.
  • Ask your advisors. They may able to check the fund you want to buy. And, by the way, they are obliged to give you all the information you need to take the decision the best suits you.

 This article has been edited for a Canadian audience.


Facebook Twitter LinkedIn

About Author

Marco Caprotti

Marco Caprotti  è Giornalista di Morningstar in Italia.

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy       Disclosures        Accessibility