...while tobacco shares are still smoking
THIS month marks ten years since the English smoking ban came into force – one year after Scotland – prohibiting smokers from lighting up in enclosed public areas.
While many experts predicted this would lead to the demise of cigarette makers, tobacco stocks have defied expectations.
The FTSE All-Share Tobacco index, which tracks the progress of tobacco companies, has shot up 163 per cent over the past decade. The share price of British American Tobacco has risen 223 per cent from 1698p to 5485p since the ban while Imperial Brands has climbed 74 per cent from 2007p to 3497p.
That compares with a return of just 20 per cent for the FTSE All-Share Index over the same period.
Juliet Schooling Latter is research director at investment adviser FundCalibre. She says: ‘Smoking in the developed world is declining and restrictions are increasing in emerging markets too. But the big threat of litigation against these companies has mostly passed and cigarette makers have grown their profits as well as paying dividends.’
Until recently, Woodford UK Equity Income fund, run by star manager Neil Woodford, had 12 per cent of its £10billion of assets in tobacco stocks, but it has just reduced its position in British American Tobacco to take profits. It also holds Imperial Brands.