Also, sin stock industries are often highly regulated. Because of the high barriers to entry, many companies associated with vice are relatively insulated from competition.
Can you avoid sin stocks?
Avoiding sin stocks isn't quite as straightforward as it seems. For example, if you own an S&P 500 fund, you're investing in Philip Morris International (PM +0.42%), ExxonMobil (XOM +1.29%), and several gambling and gaming companies.
However, some exchange-traded funds (ETFs) and mutual funds, particularly those with an ESG focus, exclude many categories of sin stocks altogether. Many ESG funds invest in a broad market index, like the S&P 500, but apply a screen, filtering out companies involved in controversial business or that don't adhere to certain sustainability approaches.
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