After Star Wars: The Last Jedi debuted on Dec. 14, fans have been endlessly raving about how great — or horrible — the film is. They’ve also taken sides while enjoying the film: either that of the dark-side worshiping Sith or the noble, light-wandering Jedi. But what does all of this have to do with exchange-traded funds (ETFs) to buy?
Just as Star Wars provides clear-cut moralistic paths — good or evil — for its viewers, so do some ETFs that focus either on so-called “socially responsible stocks” or “sin stocks.”
Although ethical choices in investing aren’t as straightforward as the light vs darkness dichotomy in Star Wars — it’s more of a grey area, no matter what you chose to buy — you don’t need to be a fan of popular Sci-Fi films to recognize the value of such ETFs.
Whether you’re interested in profiting from the light side of the market or not afraid of its controversial dark side, there are excellent ETFs to buy that satisfy your need.
May the force be with you as you sift through some of the best ETFs that play on these flavors of the market:
Sinful ETFs to Buy: Spirited Funds/ETFMG Whiskey and Spirits ETF (WSKY)
Expense Ratio: 0.60%, or $60 annually per $10,000 invested
YTD Returns: 40% vs. 20% for the S&P 500
Speaking of the dark side of the market, in just the U.S. alone, the number of people who consume alcohol has increased along with the amount of alcohol consumed. This has led to an increase in the number of alcohol-related disorders.
But for those who want to look past the misfortune in these numbers and embrace people’s freedom of choice to drink what they like (and their increasing willingness to choose alcohol), the Spirited Funds/ETFMG Whiskey and Spirits ETF (NYSEARCA:WSKY) is one of the best ETFs to buy for significant gains.
WSKY currently consists of 23 holdings, including massive allocations in beverage companies Diageo (OTCMKTS:DGEAF) and Pernod Ricard (OTCMKTS:PDRDY). And it features international exposure: with 26% of its holdings in the United Kingdom, 25% in France and 13.5% in the U.S.
Sinful ETFs to Buy: VanEck Vectors Gaming ETF (BJK)
Source: Roxanne Ready via Flickr
Expense Ratio: 0.93%
YTD Returns: 37%
Booze isn’t the only vice that investors can take advantage of on the market. VanEck Vectors Gaming ETF (NYSEARCA:BJK) is one of the best ETFs to buy for investors that want exposure to a variety of gambling stocks. And it pays to make a bet on gambling. So far, BJK has exceeded the S&P 500’s run-up by 17%, making it one of the best ETFs to buy that take advantage of sin stocks.
The success of BJK is due to its focus on a variety of companies ranging from “casinos and casino hotels, sports betting, lottery services, gaming services, gaming technology and gaming equipment.”
Top holdings like Galaxy Entertainment Group Ltd (OTCMKTS:GXYEY) and Las Vegas Sands Corp. (NYSE:LVS) provide the backbone of this multinational ETF, which has exposure in stocks from the U.S. (36%), China (15%) and Australia (14%), among several other countries.
Sinful ETFs to Buy: AdvisorShares Vice ETF (ACT)
Expense Ratio: 0.75%
YTD Returns: 2.3%
So far the list has only included ETFs that focus on specific vices, but investors looking for exposure to several types of sin stocks should consider newcomer AdvisorShares Vice ETF (NASDAQ:ACT).
For this ETF, the list does not emphasize its year-to-date gains because it only got its start two weeks ago. But ACT features a promising cast of tobacco (31.5%), marijuana (20%) and alcohol stocks (48.5%).
The goal with this ETF is to provide steady long-term gains through its emphasis on reliable tobacco and alcohol stocks, while also offering growth potential with constantly developing marijuana stocks.
Top holdings for this dark side ETF include alcoholic beverage company Constellation Brands, Inc. (NYSE:STZ), biopharmaceutical company AbbVie Inc (NYSE:ABBV) and tobacco product producer Turning Point Brands Inc (NYSE:TPB).
Socially Responsible ETFs to Buy: SPDR SSGA Gender Diversity Index ETF (SHE)
Expense Ratio: 0.20%
YTD Returns: 18%
Now that we’ve ventured to the dark side with ETFs that focus on sin stocks, it’s time to look at some of the best “socially responsible” ETFs to buy.
Notably, these light-side ETFs don’t outperform the S&P 500 as much as most of their darker counterparts do, but it’s important to consider their long-term potential (and social awareness), not just the YTD gains. That brings us to SPDR SSGA Gender Diversity Index ETF (NYSEARCA:SHE), the ETF behind the rise of the famous “fearless girl” statue.
The goal of SHE is to grant investors access to stocks that respect women in power, and “demonstrate greater gender diversity within senior leadership than other firms in the sector.” This is particularly important when you consider that the number of female CEOs is expected to decrease in 2018, despite showing an increase earlier this year: “now, just 26 women — or about 5% — are CEOs of S&P 500 companies.”
Investors can expect this issue to remain in the spotlight for a long time, especially given the current outcry regarding work-related sexual harassment in other spaces like Hollywood.
With SHE, investors get their hands on top holdings like PepsiCo, Inc. (NASDAQ:PEP), International Business Machines Corp. (NYSE:IBM) and Amgen, Inc. (NASDAQ:AMGN), all of which have a notable female presence in the boardroom or the CEO spot and/or satisfy three unique gender diversity ratios.
This ETF also has a fairly diverse sector allocation with 20% in information technology, 16% in healthcare, 14% in consumer staples and 12% in consumer discretionary, meaning you don’t get insular exposure to one sector over most others.
Socially Responsible ETFs to Buy: Global X Conscious Companies ETF (KRMA)
Expense Ratio: 0.43%
YTD Returns: 23%
If there’s one ETF on this list that a Jedi might be most inclined to invest in, it’s the Global X Conscious Companies ETF (NASDAQ:KRMA).
KRMA focuses on companies that practice positive Environmental, Social and Corporate Governance (ESG). ESG encompasses issues like climate change, deforestation, employee relations and diversity, executive pay and many others.
Ultimately, this means KRMA identifies quality companies that also have clean, socially conscious business practices and emphasize sustainability and reduced “reputational risk.”
That leads to top holdings consisting of names like retailers L Brands Inc (NYSE:LB), cloud service provider Akamai Technologies, Inc. (NASDAQ:AKAM) and natural energy company Devon Energy Corp (NYSE:DVN). And widespread industry exposure to the consumer discretionary (17%), information technology (15%), industrials (15%) and healthcare (13%) sectors.
Socially Responsible ETFs to Buy: SPDR MSCI EAFE Fossil Fuel Reserves Free ETF (EFAX)
Expense Ratio: 0.30%
YTD Returns: 20%
The final socially responsible ETF on this list is specifically geared toward the environmentally conscious.
The SPDR MSCI EAFE Fossil Fuel Reserves Free ETF (NYSEARCA:EFAX) does exactly as its namesake suggests (and a little more): It aims to identify companies in international developed markets and “[s]eeks to offer climate-conscious investors exposure to [these] international equities while limiting exposure to companies owning fossil fuel reserves.”
As such, top holdings include names like Swiss healthcare solutions company Novartis AG (ADR) (NYSE:NVS), Japanese automotive Toyota Motor Corp (ADR) (NYSE:TM) and Swiss food company Nestle SA (ADR) (OTCMKTS:NSRGY).
EFAX features strong allocations in the financials (23%), industrials (16%) and consumer discretionary (13%) sectors. And it has impressive international exposure to countries like Japan (26%), the United Kingdom (15%), Germany (11%) and France (11%), among several others.
Robert Waldo is an Assistant Editor at InvestorPlace. As of this writing, he did not hold a position in any of the aforementioned securities.
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