The ETF store known for shorting stocks like Jim Cramer and Cathy Wood is looking to bet on another category: ESG.
On Tuesday, Tuttle Capital filed with the Securities and Exchange Commission to launch two products: inverse social sentiment and hedge index ETFs. The former adviser prefers to invest in mid- and large-cap companies that he believes are politically conservative or neutral, while selling stocks that he considers "active" from a policy perspective, the prospectus said. The latter ETF holds stocks that specialize in manufacturers or sellers of guns and home security equipment.
"As a shareholder, I invest to make money," said CEO and CEO Matthew Tuttle. Conversely, considering sustainability or social causes means "investing in companies based on specific ESG values rather than what you learned in business school: profitability and value."
According to Bloomberg, the list of funds exceeds $1 billion in assets under prominent ESG player Strive Asset Management.
As Republican politicians view the ESG factor as an investment, small asset managers have launched more than two dozen anti-ESG funds in about a year.
So far, most of these products have been slow to raise funding, though about $537 million has come in as of August this year, according to Morningstar Direct. More than half of that amount went to just two ETFs: the Strive Emerging Markets Ex-China ETF, which raised more than $149 million; And the Strive 500 ETF reportedly raised $143.6 million. As of August, Morningstar had about $2.5 billion in all U.S. mutual funds and ETFs classified as anti-ESG.
"It's unclear whether the market will sustain this long-term trend," said Alisa Stankiewicz, vice director of sustainability research at Morningstar Research Services. "Desire seems to be the driving force behind much of this story."
The company, which has about a dozen products, was founded by Vivek Ramaswamy, who has retired and is running for the Republican nomination for president.
Notably, three of the 27 funds Morningstar listed in an article on anti-ESG funds earlier this year have closed, reflecting their struggle to find assets, Stankiewicz said.
But Tuttle said he sees a need for antisocial strategies amid a wave of anger by some conservatives over companies like Anheuser-Busch, Target and Disney.
"You have a political environment where companies are forced to address these [social] issues," Tuttle said. "You end up with companies that suddenly do something ... and you see their stock fall."
While the companies' campaigns and social positions may in some cases offend their customer base, "if you're a shareholder in these companies, you're going to be upset," he said.
Last month, Tuttle announced that one of the company's products, the Long Cramer Tracker ETF, would cease trading next Monday. Launched concurrently with the Inverse Cramer Tracker ETF, the ETF attracted $1.3 million in assets.
“I built a Cramer Long [ETF] with Jim as a friend and was hoping maybe there would be a conversation. "When it became clear that wasn't going to happen, we shelved the project for a long time," Tootell said. .
The firm said it will not launch an inverse version of its Social Awareness and Self-Defense Index ETF.
Despite the growing number of anti-ESG products on the market, Tuttle said he sees room for the company's planned ETFs.
"Current funds are problematic," he said, because some are significantly reducing the range of stocks they can choose from.
And those that don't, including index funds that focus on proxy voting (the STRIVE model), face an uphill battle to raise assets, he said, adding that $1 billion would be a "turnover error" for BlackRock or Vanguard. from
"You see something like Strive, they're trying to challenge BlackRock, good luck with that," Tuttle said.
