Vice-focused BAD Investment ETF launches at $15
15:20, 22 December 2021
Setting out to offer retail investors diversified exposure to a wide variety of vice stocks through an exchange-traded fund (ETF), the BAD Investment ETF launched Wednesday.
“Our goal is to level the playing for all through democratising investing by creating investment vehicles easily accessible for all – in an effort to build a stronger tomorrow for the retail investor community,” notes the fund’s website.
The BAD Investment ETF – its name an acronym for betting, alcohol and drugs – will trade on the NYSE Arca exchange under the ticker BAD. The initial launch is for 50,000 shares, at $15 per share.
“This has been about a two-year process,” said BAD Investment president Thomas Mancuso. “We’re looking forward to rolling this out.”
The investment composition of the fund is targeted at 33.3% gaming stocks, including both casinos and online sports gaming, 33.3% pharmaceuticals and 23.3% alcohol, with a 10% cap on cannabis-related stocks. The fund tracks the EQM BAD Index, a bundle of 57 holdings, primarily marquee names in each sector.
Fund holdings are primarily large-cap companies with a minimum $1bn valuation and a minimum $1m six-month average trading volume, according to the prospectus filed with the US Securities and Exchange Commission. The fund will be rebalanced quarterly.
Individual companies in the fund are generally household names, including MGM Grand and DraftKings in the betting bucket, Diageo and Molson Coors in the alcohol bucket and Pfizer and Moderna in the drugs bucket. Cannabis-related stocks, which may not be as well known to the general public, include Aurora and Tilray.
Positioned for Covid-19 volatility
Mancuso believes the focus of the investment targets is well suited to the current environment, even as uncertainty over the Covid-19 Omicron variant is causing stock-market volatility.
“We see a lot of positive outlook,” added Mancuso. “Casinos would be a reopening play and I can see cannabis growing as legalisation is advanced. We think we are positioned well against Covid-19-related downside with the pharmaceutical exposure.”
The BAD Investment is a unit of Kansas City, Missouri-based Thematic Investments. Prime Capital managing director Eric Krause is the day-to-day portfolio manager. Foreside Fund Services is underwriting the ETF’s launch. Brokers offering the fund’s shares include CharlesSchwab, BNY Mellon, E*Trade, Fidelity, Interactive Brokers, Robinhood, SoFi and TD Ameritrade.
Not all vices, however, are part of the BAD Investment strategy. “We didn’t see tobacco as part of our strategy,” said Mancuso. “Other ETFs have tobacco exposure.”