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A public interest suit against insurance companies investing in tobacco stocks has again sparked a debate on ethical investing. However, insurance companies—or any investor for that matter— could risk underperformance by eliminating tobacco companies from their portfolios.
The BS Tobacco index, an in-house gauge for the performance of five domestic cigarette companies, has returned 460 per cent since March 2007. Significantly higher than the benchmark Sensex of the BSE, which delivered 125 per cent return in the period.
The performance mirrors that of ITC, the country’s largest cigarette maker, nearly 60 times bigger than the second-biggest listed tobacco company, Godfrey
