The world’s first whiskey exchange-traded fund, the Spirited Funds/ETFMG Whiskey & Spirits (WSKY), began trading on Oct. 10. The new fund sets the tone for a possible expansion of individual spirits-based funds on the market.

“WSKY invests primarily in companies that derive the majority of their revenue from producing and marketing whiskey and spirits, as well as a small number of companies that derive part of their revenue from the industry,” the fund manager said in a statement at the time.

The WSKY ETF holds 19 international equities tied to the global spirits industry and has an expense ratio of 0.75%. This ratio is relatively high in comparison to other funds in the consumer discretionary space. (See also: Add Some Sin To Your Portfolio With This ETF.)

In addition to this risk, the fund is weighted heavily toward two holdings. Diageo (DEO) — the owner of Johnnie Walker and bourbon maker Bulleit — comprises 23.65% of the fund. Meanwhile, Pernod Ricard (PDRDF), which owns Chivas Regal, Jameson and The Glenlivet, represents 10.30% of the fund. The two stocks total 33.95% of the holdings.

Other holdings include Brown-Forman (BFB), the parent company of Jack Daniels, Thai Beverage (THBEV) and Constellation Brands (STZ).


David Bolton is President and CEO of Spirited Funds, which manages the ETF. He argues that the investment represents a positive opportunity to tap into growing global demand for whiskey and spirits. Alcohol companies are widely considered sin stocks, but the industry has seen tremendous growth around the globe.

"We believe we're at year 5 of a 25- to 40-year super cycle that could see continued growth in consumer demand for whiskey and spirits, much like what has occurred with craft breweries over the past two decades," he said in a statement when the fund launched.

"Our new exchange-traded fund is the first to provide exposure to this global industry — with the overall alcohol industry boasting sales of more than $1 trillion per year — and is intended to play a complementary role in a diversified investment portfolio through exposure to a targeted segment of the consumer discretionary sector." (See also: Sinful Investing: Is It For You?)

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