Our Approach

Engagement over exclusion.

Reduced-risk categories are disrupting the $900bn cigarette industry — reshaping growth, valuations and competitive positioning in real time, while opening meaningful public health opportunities.

The opportunity

Resilient cash flows. A category in transition.

The global tobacco sector has historically delivered strong long-term returns, supported by resilient cash flows, pricing power and high dividend yields. Yet many investors have excluded the sector on public health grounds.

We believe active engagement — rather than exclusion — accelerates the industry shift toward less harmful alternatives. This supports both improved public health outcomes and sustainably improved valuation multiples for transitioning companies.

Why it matters

Industry transition drives returns.

Improved revenue growth

Companies expanding reduced-risk product (RRP) exposure benefit from category growth tailwinds.

Higher valuations

Markets reward perceived greater sustainability and longevity of cash flows with multiple expansion.

Public health alignment

Faster transition to reduced-risk products supports better outcomes for users globally.

Industry case studies

Leaders demonstrate the transition opportunity.

Philip Morris International

PMI

PMI has led the sector's transition, supported by sustained investment in next-generation nicotine technologies. Reduced-risk products now account for more than 40% of revenue, and the stock trades on a valuation premium versus peers.

~$270B

Market cap

40%+

RRP revenue share

British American Tobacco

BAT

As one of the world's largest tobacco companies, BAT combines a high dividend yield with growing reduced-risk product exposure — supporting potential valuation re-rating as transition accelerates.

48.5%

TTM return

Growing

RRP exposure

Disclosures

Important information.

Investing involves risk. Principal loss is possible. Investments will be concentrated in the securities of issuers in the tobacco or nicotine-related group of industries. The tobacco industry is subject to significant risks and uncertainties that could materially and adversely affect the financial condition and cash flows of companies operating in it.

Investing in foreign securities typically involves more risks than investing in U.S. securities, including risks associated with political and economic developments, trading practices, availability of information, limited markets and currency exchange rate fluctuations. Investment in emerging market securities involves greater risk than that associated with investment in securities of issuers in developed foreign countries.

Past performance is not a guarantee of future results. Company examples are provided for illustrative purposes only and do not constitute investment advice or a recommendation to buy or sell any security.