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Adam Muston

Adam Muston is the ETF Capabilities Manager for Australia. He is responsible for the ongoing distribution of existing ETF products. Adam also assists in the management of our ETF platform and the creation and quotation of new products.                                                       

In this role Adam works closely with financial advisers and intermediaries, and administration service providers.

Prior to joining UBS Global Asset Management, Adam worked in equity and derivative sales at Shaw Stockbroking and prior to that at Phillip Capital.

An Easy Way for Your Portfolio to Quit Smoking

Friday, October 30, 2015


By Adam Muston

If Prime Minister Turnbull wants – or is forced – to get out of his investments in cigarette-makers, UBS Asset Management has just the fund.

Last week the federal Opposition has sought to highlight the Prime Minister's investments in an exchange-traded fund (ETF) that includes shares cigarette maker British American Tobacco (BAT), owner of the Dunhill, Kent, Lucky Strike, Kool, Benson & Hedges, Rothmans and Pall Mall brands. The highly profitable BAT – it recently announced a half-yearly profit of £2.65 billion ($5.66 billion) – is a constituent of the ETF because the fund is constructed according to a particular index.

According to The Australian newspaper, two of Mr Turnbull’s other investment funds hold shares in Japan Tobacco, maker of Camel cigarettes.

It is not as if the Prime Minister has sought to invest directly in these tobacco companies – the companies are part of a particular index, therefore they are also part of ETFs designed to track the performance of those indices.

But if it is not a good look, the Prime Minister could easily switch to an ETF that excludes investments in tobacco companies – like UBS’ range of IQ ETFs.

UBS IQ ETFs exclude companies with significant business activities involving tobacco. Furthermore UBS IQ ETS also exclude companies with significant business activities engaged in the production of cluster bombs, landmines, chemical and biological weapons and depleted uranium weapons.

It is an ethical “tilt” on the same kind of broad diversification for which ETFs are used in the first place.

Simple access to global markets – without tobacco – can easily be obtained by buying either the

-    UBS IQ MSCI World ex Australia Ethical ETF (UBW)
-    UBS IQ MSCI Europe Ethical ETF  (UBE)
-    UBS IQ MSCI USA Ethical ETF (UBU),
-    UBS IQ MSCI Japan Ethical ETF (UBJ)
-    UBS IQ MSCI Asia APEX 50 Ethical ETF (UBP).

This range allows an investor to target broad global diversification, or a more regional/single-country focus, in a single trade that is itself listed on the ASX.

These ETFs are not massively different from the non-ethical ETFs built over the same indices: for example, the UBS IQ World ex Australia ex Tobacco ex Controversial Weapons (UBW) excludes 13 companies out of 1560 (eight tobacco, five controversial weapons companies), the UBS IQ Europea ETF (UBE) removes only three companies out of about 430, while the UBS IQ Japan Ethical ETF (UBJ) screens one stock out of 320.

But if you’re having a tough time at the despatch box of the House of Representatives, or you just don’t like the idea of investing in tobacco, these ETFs fit the bill perfectly.  

And you’re not missing anything in terms of performance: in the one year to 31 August 2015, the MSCI World ex Australia ex Tobacco ex Controversial Weapons Index returned 27.3 per cent – with the MSCI World ex Australia Index, which returned 27.4 per cent.

Adam Muston is the ETF Capabilities Manager for UBS in Australia.

DISCLAIMER: Whilst the information and statistics contained in this article are believed to be correct at the time of publishing, they are indicative only and do not constitute legal or financial advice. Investors should seek independent financial and legal advice before deciding whether any investment is right for them.

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