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An interesting concept.....

A small group of conservative money managers is trying to catch up to investment funds that for years have catered to those concerned about climate change, diversity or animal rights.

The nascent effort, which has attracted some prominent names, seeks to woo investors disgruntled by increased involvement by some companies in political and social issues.

Whether conservatives will move money from more traditional investments to funds that hold shares in companies that are either neutral or lean conservative on political questions remains to be seen.

“It shows that there are people for whom pretty much everything these days is political—on both sides,” said David Hopkins, a Boston College professor who studies the nation’s political divisions.

So-called ESG—environmental, social and governance—funds are popular with progressives who hope to use their dollars to influence companies as well as with others who see growth potential from companies focused on industries such as renewable energy.

Such investments have ballooned in size in recent years. Morningstar estimates sustainable portfolios in the U.S. last year took in nearly a quarter of all new money across mutual funds and exchange-traded funds, or ETFs.

The dollar amounts invested so far in the conservative funds are minuscule compared with the trillions in the U.S. stock market. Still, recent growth has been significant.

Two ETFs run by 2ndVote Advisers LLC near Nashville have grown in the past month from about $6 million to roughly $25 million, representatives say. Money managers at the firm say they hope they will surpass $100 million by the end of the year after adding more portfolio choices and courting pension funds in conservative-leaning states.

“It’s an investment option for unwoke investors,” said Andy Puzder, who is on the firm’s advisory board. “We believe that companies that focus on profit make more than companies that don’t.”

Investors propelled ESG funds to new heights in 2020, and federal agencies are watching. WSJ explains why regulators have ethical and sustainable investment funds under review. Photo Illustration: Alex Kuzoian
Mr. Puzder is the former chief executive of CKE Restaurants, the owner of Carl’s Jr. and Hardee’s fast-food chains. He withdrew in 2017 from consideration to be former President Donald Trump’s first labor secretary after questions arose about his past employment of an undocumented housekeeper.

Other high-profile names involved with 2ndVote Advisers include former Tennessee Congresswoman Diane Black and Kevin Hassett, who served as chairman of the Council of Economic Advisers in Mr. Trump’s administration.

Mr. Puzder is heavily involved with the funds on a day-to-day basis, Ms. Black chairs the firm’s board and Mr. Hassett works on product development. Daniel Grant, a veteran of the banking and investment industries, is chief executive.

New ETFs often have a hard time getting off the ground and many fail because of a lack of investor interest. Todd Rosenbluth, head of ETF and mutual-fund research at financial-data provider CFRA, said funds that grow to assets under management of $100 million or more tend to be more viable.

The American Conservative Values ETF, which was started just before last fall’s election, has seen its assets under management more than triple so far this year, from about $3 million to more than $9 million. The growth “absolutely validates that demand exists,” according to Bill Flaig, the founder and chief executive of the fund’s suburban-Washington management firm, Ridgeline Research.

The fund that Mr. Flaig helps oversee “boycotts” Facebook Inc., Apple Inc., Google parent Alphabet Inc. and more than 20 other companies that it views as overly progressive in their corporate politics.

“Even though tech has traditionally been hostile to conservatives, the fund still maintains exposure in that sector,” Mr. Flaig said. “To date, nobody has reached out to us to say that they are happy or displeased to be boycotted.”

In April, the American Conservative Values ETF dropped from its portfolio Atlanta-based corporations Delta Air Lines Inc. and Coca-Cola Co. , after their executives criticized a new Georgia voting law that civil-rights groups have argued will make voting harder.

“I think people will be willing to look at these strategies, if their political affiliation is aligned with the priorities and it performs well,” Mr. Rosenbluth said. “If it doesn’t perform well, then it’s going to struggle to gather assets.”

Still, Mr. Rosenbluth is skeptical of demand. He pointed to an ETF created in 2017 with the ticker MAGA—the same abbreviation for Mr. Trump’s “Make America great again” campaign slogan. The fund, which has grown to only about $11 million in assets, includes 150 large companies whose employees and political-action committees support Republican candidates.

Hal Lambert, chief executive of MAGA fund manager Point Bridge Capital, said he thinks there was less motivation to invest in his product when Republicans were in power in Washington. “With Biden taking over in January, people are getting more and more upset, and I think you will see more people wanting to invest,” he said.

Chipotle, which 2ndVote views as neutral on gun issues, is among the top 10 holdings in the company’s 2nd Amendment fund.
Mr. Lambert said it also took years for the ESG movement to gain traction and that distribution is harder to do for the smaller firms that have started investment options for conservatives.

2ndVote Advisers started offering two ETFs after last year’s presidential election. One fund caters to investors who feel strongly about opposing abortion, while the other is targeted at supporters of gun rights.

The funds use a “social scoring system” that looks at a variety of company information, including direct and indirect donations, activities and stated policies, sponsorship of political and advocacy-related events, donations by corporate leaders, and lobbying efforts for or against various issues on the state and federal level.

The ETFs invest in companies they view as neutral or conservative on abortion or gun rights, and not necessarily because they deal directly with those issues. A company may be included in one of the funds, even if it isn’t viewed as neutral or conservative on all issues.

Chipotle Mexican Grill Inc., for example, is among the top 10 holdings for 2ndVote’s 2nd Amendment fund. The company, which didn’t respond to a request for comment, is viewed by the firm as neutral on gun issues and is included in the mix because of its past stock performance.

As of Monday’s market close, the abortion-related fund was up 14.4% so far this year and the gun-related fund was up 17.2%. The S&P 500 was up 10.8% year to date.

As early as this summer, 2ndVote Advisers plans to add funds focused on technology companies that haven’t blocked speech by Mr. Trump or other conservatives, companies that have been supportive of Israel, companies involved with the manufacturing and sale of guns and law-enforcement devices and companies involved in U.S. energy production, including renewable energy.

The 2ndVote funds have ties to a company Ms. Black’s husband, David Black, created close to a decade ago that helps conservatives direct their spending to companies and charities that align with their values. Called 2ndVote Inc., it operates a website that ranks companies and nonprofits on a five-point scale for political advocacy.

Those viewed as strongly supporting liberal values and organizations, either monetarily or through advocacy, are given a one. Those strongly backing conservative values and groups are rated as a five.

Every company in the S&P 1500 has been rated, as well as some private companies and charities. More than 300,000 people subscribe to a free newsletter about the ratings.

Mr. Puzder said conservatives have been slower than liberals to move to specialized investments, but that the silencing of Mr. Trump on social-media platforms and corporate involvement in the Georgia election-law debate have fueled interest.

“A lot of this has kind of woken up conservatives,” he said. “Now, we’re catching on.”

Posts: 17284 | Location: Stuck at home | Registered: January 02, 2015Reply With QuoteReport This Post
I Deal In Lead
Picture of Flash-LB
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Originally posted by ZSMICHAEL:
“It’s an investment option for unwoke investors,” said Andy Puzder, who is on the firm’s advisory board. “We believe that companies that focus on profit make more than companies that don’t.”

I'm tempted to post a picture of Captain Obvious here, but I won't. Of course they'll make more profit if they focus on it instead of SJW crap. I have been investing accordingly for a long time. I invest to make money, not to make political statements.
Posts: 10626 | Location: Gilbert Arizona | Registered: March 21, 2013Reply With QuoteReport This Post
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This is interesting. I was thinking about something like this last night.Thanks for posting.

I'm alright it's the rest of the world that's all screwed up!
Posts: 1366 | Location: Southern Michigan | Registered: May 30, 2009Reply With QuoteReport This Post
Big Stack
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I'll just invest in what gives me the highest return.
Posts: 21240 | Registered: November 05, 2003Reply With QuoteReport This Post
The Ice Cream Man
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That seems more likely to be a paid promotional piece than a real article. Those are hardly large enough to be considered real funds.
Posts: 5748 | Location: Republic of Ice Cream, Miami Beach, FL | Registered: May 24, 2007Reply With QuoteReport This Post
Fighting the good fight
Picture of RogueJSK
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Not a new concept, as far as being the opposite of the woke ESG funds... There's been at least one "anti-ESG" mutual fund for a couple decades now: VICEX.

VICEX focuses on investing in alcohol, tobacco, gaming, and firearms/defense stocks, industries that are usually specifically excluded by the various ESG funds, despite being solid performers (especially during recessions).
Posts: 32564 | Location: Northwest Arkansas | Registered: January 06, 2008Reply With QuoteReport This Post
Picture of IntrepidTraveler
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Son of a gun. (Pun intended.) I just tried to buy VICEX on ETrade and it can't be sold to a resident of the state I'm in (New Mexico).

Thus the metric system did not really catch on in the States, unless you count the increasing popularity of the nine-millimeter bullet.
- Dave Barry

"Never go through life saying 'I should have'..." - quote from the 9/11 Boatlift Story (thanks, sdy for posting it)
Posts: 3302 | Location: Carlsbad NM/ Augusta GA | Registered: July 15, 2007Reply With QuoteReport This Post
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