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Quarter-End Insights

Consumer Defensive: Meaningful Opportunity in Tobacco

With 9% of our consumer defensive coverage universe in 5-star territory, investors have a chance to feast on firms with strong competitive advantages.

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The Morningstar Global Consumer Defensive Index held up comparably well in the fourth quarter, sliding 7% through Dec. 20 versus a 14% drop for the broader market. Still, consumer defensive shares are off 10% for the year, in line with the overall market (Exhibit 1) amid concerns about the competitive landscape and the ability of firms to offset higher commodity and transportation costs by increasing prices.

Exhibit 1: Sector has modestly outperformed the market

Erin Lash does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.