5 Top Fund Managers Back Tobacco Stocks

Despite regulation on tobacco products putting profits at risk, tobacco stocks deliver positive returns and top fund managers in the UK still favour them

Karen Kwok 3 June, 2016 | 1:02PM
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The introduction of standardised packaging on tobacco products has come in force in the UK and France in an effort to reduce demand for tobacco products – potentially risking the profit margins of tobacco companies. However, five of the top UK equity income fund managers in the UK clearly do not perceive the new policy as a threat to dividends; they own tobacco companies in their top 10 holdings, according to data from Morningstar Direct.

Plain packaging of tobacco products began in the UK and France on May 20, following Australia’s move in 2012. It restricts the use of logos, colours, brand images and promotional information on packaging other than brand and product names displayed in a standard colour and font style. According to World Health Organization’s Director-General Dr Margaret Chan, this measure can reduce the attractiveness of tobacco products.

“Plain packaging kills the glamour, which is appropriate for a product that kills people,” says Chan, “It restricts tobacco advertising and promotion. It limits misleading packaging and labelling. And it increases the effectiveness of health warnings.”

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Artemis Income R Inc2.12 GBP-2.54Rating
ASI UK High Income Equity R Inc68.24 GBP-2.88Rating
British American Tobacco PLC2,541.00 GBP0.00Rating
Imperial Brands PLC1,549.00 GBP0.00Rating
LF Equity Income A Sterling Acc3.39 GBP0.00
Royal London UK Equity Income A727.52 GBP-2.07Rating
Temple Bar Ord1,043.57 GBP-3.73Rating

About Author

Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk