Subversive debuts three active thematic ETFs
Jan 10th, 2023 | By James Lord, CFA | Category: Equities
New York-based investment advisor Subversive Capital has made its ETF debut by launching three actively managed funds targeting the investment themes of decarbonization, food security, and mental health.
Subversive's debut ETFs target the investment themes of decarbonization, food security, and mental health.
Listed on Cboe BZX Exchange, the Subversive Decarbonization ETF (DKRB US), Subversive Food Security ETF (KCAL US), and Subversive Mental Health ETF (SANE US) come with expense ratios of 0.75% each.
All three ETFs invest globally including in stocks listed in emerging markets. Securities are selected and weighted using both quantitative and qualitative factors with a view to enhancing growth and earnings potential.
Subversive will generally also assign greater weights to companies whose primary business models and growth prospects are most aligned with the targeted theme.
The Subversive Decarbonization ETF invests in companies with business activities linked to the creation of nuclear, wind, water, and solar energy, the development of advanced battery technology, the mining of rare earth minerals, and the production of technology that helps to reduce carbon emissions.
Christian H. Cooper, Portfolio Manager of Subversive Capital's ETFs, said: "To us, 'decarbonization' does not mean the absence of carbon in a fund but rather the inclusion of companies with the tools and technologies urgently needed to reduce our reliance on fossil fuels as we continue to power the modern world. That means investing in battery technologies and the rare earth minerals that comprise them, proven nuclear and fusion technologies, and cash flow positive and cost-effective hydropower assets."
The Subversive Food Security ETF invests in companies that facilitate the production, distribution, or delivery of food, as well as firms that invest in technology and tools necessary to support global food security.
In selecting securities, Subversive factors in global macroeconomic events that may affect the global food supply chain, such as the invasion of Ukraine, as well as the long-term effects of climate change on food production and prices. In doing so, the firm seeks to identify companies that are positioned to help the global economy manage the truly supply-driven food chain shocks and inflationary shocks resulting from the global pandemic response.
Cooper added: "Fractured supply chains, higher inflation, climate change, and greater uncertainty make food security one of the most pressing concerns of our changing world. We believe the relevant inputs, assets, and processes – such as fertilizer, farmland, and consumer-facing distribution – are dramatically under-priced, even in the current environment. KCAL seeks to vertically own the inputs, assets, and processes that will be crucial to feeding the global population in an increasingly multi-polar world."
The Subversive Mental Health ETF invests in companies that are developing pharmaceuticals and therapies for the treatment of mental health issues such as major depressive disorder as well as firms that are seeking to enhance people's mental health in areas such as fitness, sleep, and nutrition.
Cooper concluded: "The last few years of the pandemic, economic uncertainty, and a war in Europe have laid bare the stark reality of the global mental health crisis. Treatment-resistant depression in the US alone accounts for over $90 billion dollars in incremental annual healthcare costs; however, this is not the whole picture.
"One missing piece of the puzzle is the dramatic rise in metabolic syndrome and inflammation and their apparent direct connection to brain health. The most recent research has even begun to refer to Alzheimer's and Parkinson's disease as "Type III" diabetes, which reflects the idea behind the SANE ETF: that metabolic health is mental health. To us, this means everything from owning companies focused on the early detection and management of metabolic syndrome to large pharmaceutical companies developing drugs for diabetes, depression, Alzheimer's, and metabolic epilepsy."
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