Anti-woke provider of ETFs closes funds because of low inflows

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2nd Vote Funds, an asset manager and index provider, plans to liquidate the two ETFs it created in 2020 for conservative investors, according to the company.

The $30.3mn “2ndVote Society Defended” and the $19.3mn “2ndVote Life Neutral Plus” ETFs closed to investors on August 3, the company confirmed. The funds have stopped trading on Cboe.

The “Society Defended” ETF screens out companies “that oppose 2nd Amendment rights, border security, civil society or support for law enforcement”, according to the manager’s website. The “Life Neutral Plus” ETF excludes investments in companies that support abortion.

The ETFs failed to attract enough assets to maintain research and operations, said David Black, chief executive and founder of 2nd Vote.

“There is an overall failure in either our messaging or a commitment by conservatives and Christians to actually take meaningful steps to counter the successful radical ESG/woke/leftist agenda,” Black said. He added that there were no plans to create another ETF at this time.

Together, the two funds attracted $3.9mn in net inflows over the 12 months ended June 30, Morningstar Direct data shows.

Both ETFs began operations in November 2020.

The firm has gained attention in recent years for its anti-ESG commentary, which has been aired at a time of a growing backlash against ESG investing.

Vivek Ramaswamy, who is running for US president in 2024, founded Strive Asset Management as an anti-ESG fund shop, with inflows of $811mn over the year ended June 30 across the firm’s eight ETFs, Morningstar Direct data shows.

Faith-based provider Inspire ETFs announced in August that the shop had renounced its ESG label.

The failure to gain flows using anti-ESG marketing or any other specific or factors-based products was common, said Loren Fox, director of research at Fuse Research.

“It’s not that there is no audience for them, but if what you’re doing is emphasising a particular take on economy, world or markets, it could take longer if your [shop] doesn’t have the performance record in the past,” he said.

Rising equity and bond markets drove assets in Morningstar’s US sustainable category to more than $313bn as of June, according to analysis from Morningstar. That figure includes open-end funds and ETFs aligned with ESG principles.

Investors pulled $635mn from US sustainable funds in the second quarter. Sustainable funds in the US have experienced net outflows for three quarters in a row, Morningstar reported.

However, Fox said: “Regardless of your politics, there is a body of research that shows that paying attention to environmental, social, governance risks can either benefit performance or doesn’t detract from performance in the long run.”

2nd Vote would maintain its index, Shareholders First, which only tracked companies that were rated neutral on political and social issues, Black said.

Black declined to comment on how the ETF liquidations affected the company’s priorities in the future.

*Ignites is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at ignites.com.