Pieter Vorster, Founder and Chief Executive Officer of Hexis Capital Management, joined Keith Black, Managing Director of RIA Channel, to discuss the Hexis Active Nicotine Engagement ETF (NICO) and taking an engaged approach to investing.
Vorster explains that the tobacco sector is experiencing a nicotine transition, which he describes as consumers moving away from combustible tobacco products, such as cigarettes, toward noncombustible, smoke-free alternatives, including vaping, nicotine patches, and heated tobacco products. He points to increases in smoke-free organic growth and revenue across tobacco companies.
Vorster highlights NICO as a way for investors to engage with the tobacco industry. He explains that the ETF incorporates the Hexis Nicotine Transition Score, a framework of 27 indicators that assess where a business is today, its growth potential for reduced-risk products, and its governance. The score informs both the valuation process and areas where Hexis can engage with companies that may be falling short to accelerate the shift toward reduced-risk tobacco products. He adds that existing holders may also view the ETF as an alternative to a single stock holding, providing exposure to the sector alongside an active engagement process.
WEBCAST – Exclusion or Engagement: Rethinking Tobacco for Client Portfolios
Tobacco has been among the best-performing US industries for half a century, and it is now replacing its own core product. Smoke-free products grew from about 8% of world nicotine volume in 2015 to 17% in 2025, and the FDA has allowed a nicotine product to carry an explicit lower-disease-risk claim against cigarettes. This session asks whether that changes the case for holding the sector in a client portfolio.
The webcast will cover:
- What tobacco harm reduction is: why it is inhaling smoke rather than nicotine that causes smoking-related disease, what the independent evidence supports, and why the subject is still contested.
- Exclusion or engagement: what each achieves for a client portfolio and for public health, and what 25 years of exclusion has cost the largest US public pension fund.
- Why we expect the companies that transition best to produce the strongest returns, how the Hexis Nicotine Transition Score identifies them, and how NICO weights and engages them.
- What a tobacco allocation is for: income, diversification or a re-rating, and where a concentrated single-sector fund fits in a client allocation.
Accepted for 1 CFP / IWI / CFA CE Credit
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