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Add a Little Sin to Your Portfolio

There’s a new investment vehicle that has hit the market that offers exposure to a “recession-proof” sector. That sector is the sin sector.

We are getting down to the last days of 2017. Time to pull out the crystal ball. Time to read the tea leaves.

Everyone wants to know what’s going to happen next.

Of course, this is when many people are looking to realign their investment portfolios. No one wants to lose money. And no one wants to miss out on the next big rally.

But what if you could add exposure to a sector that typically made gains regardless of good times or bad?

There’s a new investment vehicle that has hit the market that offers exposure to a “recession-proof” sector and has very small fees.

That sector is the sin sector.

A New Avenue for Gains

Sometimes it pays to sin.

Wall Street has long viewed the “sin sector” as recession-proof. People will drink and smoke when times are good. And people will drink and smoke when times are bad as a way to relieve stress.

To add a little sin sector to your portfolio, you can take a look at the new AdvisorShares Vice ETF (NYSE: ACT), which started trading on Tuesday, December 12.

The exchange-traded fund (ETF) offers exposure to the alcohol, cannabis and tobacco industries. That’s where you get the letters for the ticker symbol.

And these are all industries that are seeing stellar growth.

The Sin Sector Can’t Be Stopped

Despite all the hits the tobacco industry has taken over the years, it has found ways to maintain its earnings and continue to grow. Companies have quickly expanded into the vaping and e-cigarette sector. They are also adding exposure to the cannabis industry.

Morgan Stanley reports that the tobacco industry has enjoyed compounded earnings growth of 7% per year over the past 10 years.

Industry giant Altria Group Inc. (NYSE: MO) has a fat dividend yield of 3.69%. The S&P 500 has an average yield of only 1.9%. (If you’d like a chance at even bigger yields, click here.) And the stock has climbed a modest 6%.

The alcohol industry has put in a solid performance this year. The Distilled Spirits Council reported that volume for spirits has grown by 2.4% during the last year.

The Spirited Funds/ETFMG Whiskey & Spirits ETF (NYSE: WSKY) has climbed a stunning 35.5% since the beginning of 2017.

And there is still room for more growth as alcohol companies look for ways to expand their reach. Earlier this year, Constellation Brands announced that it had taken a stake in the cannabis industry. Its goal is to develop drinkable marijuana products. Molson Coors reported that it’s looking into potential opportunities in the sector.

The legal cannabis industry is still relatively new, with only 29 states and Washington, D.C., offering access. But more are expected to vote on legalizing medical marijuana in 2018.

Right now, the cannabis industry sits at an estimated $6 billion. That number is expected to explode to $50 billion by 2026.

That amazing growth offers a lot of room to make some great profits in your portfolio.

Tiny Fees, Big Profits

With an expense ratio of only 0.75%, the AdvisorShares Vice ETF offers a great way to play the sin sector and not give up a lot of your gains to fees. (To learn more about how you can cut fees and grow your retirement nest egg, click here.)

Whether you believe the market will continue to rally in 2018 or will finally collapse, the sin sector offers a great way to diversify your portfolio to include stocks that are typically recession-proof. Even if you don’t snatch up shares of ACT, this is one sector worth a closer look.

And if you don’t feel comfortable making profits on this sector, remember that you can always give some (or all) of your gains to charity.

Regards,

Jocelynn Smith

Sr. Managing Editor, Banyan Hill


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