Investing in booze, fags and playing ‘sin shares’ may make you filthy wealthy

There are occasions when ESG funds may offer superior returns but this isn’t guaranteed.

Dzmitry Lipski, head of funds analysis at Interactive Investor, recommends the iShares Global Clean Energy ETF however warns the solar is not going to at all times shine on the sector.

While the ETF has returned a powerful 125 % over 5 years it has plunged 17 % to date this 12 months.

Lipski warned ESG funds might not work for individuals who wish to generate earnings. “They have low weightings to the energy and industrials sectors, which are good sectors for dividends.”

Juliet Schooling Latter, research director at FundCalibre, tips JPM Climate Change Solutions, that invests in companies involved in sustainable construction, transport and energy. Launched in June 2021, it has fallen six percent over the last year.

Laith Khalaf, head of investment analysis at AJ Bell, said those interested in ESG can reduce risk by diversifying across a broad-based global fund and tips Liontrust Sustainable Future Global Growth. 

This has returned 50 percent over five years, but is down seven percent over the last 12 months. So is this another case of “go woke, go broke”?

ESG sceptics may be tempted by the BAD ETF whose top holdings include casino operators Caesars Entertainment, Las Vegas Sands and Diageo.

Performance has been mixed. While it is up 16.99 percent over the last six months, over one year it has fallen 8.52 percent.

The VICE ETF’s top holdings including British American Tobacco, champagne and luxury goods conglomerate LVMH, Pernod Ricard and The Boyd Gaming Corporation. It is up just 6.95 percent over five years and has fallen 1.52 percent over the last 12 months.

It isn’t easy being green but clearly the wages of sin aren’t that reliable either. Interactive Investor’s head of investment Victoria Scholar reckons: “It’s higher to take a balanced method.”

Instead of getting dragged right into a woke investing struggle, buyers’ precedence must be to construct a sustainable pot of cash for his or her retirement. Even if it means mixing the dangerous with the nice.