This humble financial detective digital avatar decided to conduct a bit of an experiment recently. 😬

I asked four friends to name three companies they own through their retirement fund.

Can you guess what happened? … You probably can …

Only one could do it.

So there you have it … that’s the entire article!

(Well no … not really)

But you may justifiably be asking … “So what?”

Well, imagine owning stocks in …

❓A weapons manufacturer 🗡️…

❓ Or a gambling joint 🎰…

❓ Or a private prison 🏦

(Sorry, couldn’t find an emoji for a jail so I went with something close)

Now it be fair, you might not care … just as long as the return each year on your retirement fund is to your liking.

And let’s face it … for a lot of “sin” stocks, the returns are incredible. 😳

🔑 A study from 1980-2019 found sin portfolios outperformed the S&P 500 in both mean return and risk-adjusted return. 

🔑 And a European study showed sin stocks outperformed the broader market by 4.7% annually, between 1985 and 2015.

In fact, looking at the tobacco industry, Altria Group, the owner of Marlboro, generated an annualized average return of 20% from 1968 to 2017, with reinvested dividends.

Not to be outdone, the defence industry has also generated worthy returns.

🔑 The SPADE Defense Index increased 48% since the Russia-Ukraine war started and gained 11.5% through June 2024. 

🔑 And over 27 years, defense stocks recorded positive gains in 22 years and outperformed the U.S. stock market in 18 of those years.

The irony …?

Many public employee pension funds (teachers, firefighters, civil servants) unknowingly own weapons manufacturers while their members advocate for peace. 🤫

There’s an uncomfortable truth to be faced with retirement investments.

The most profitable investments for retirement funds have often been companies that:

✅ Kill their customers (tobacco)

✅ Profit from human conflict (weapons)

✅ Damage the environment (fossil fuels)

✅ Exploit addiction (gambling, alcohol)

This creates a perverse incentive where retirement funds … meant to secure people’s futures … profit from industries that actively harm society and increase the very healthcare and social costs retirees will face.

It’s the ultimate conflict of interest: your retirement fund gets richer while society gets sicker.

But if you’re socially amoral, this could also arguably be the best retirement fund investment strategy around. 💰

It’s a vicious system … that took years to perfect!

Do you know what companies your retirement fund is invested in? (Spoiler: If you don’t know, that’s exactly the problem.)