Guns, Birth and Funds: This ETF Will Play to the Right

Issuers of investment products have always talked about how their products allow investors to express their opinion on the markets. This could be about their environmental policy views or about promoting the right to own guns or the right to live as one chooses whether lesbian, gay, bisexual or transgender. Over the years, these expressions have morphed from broad market exposure to sectors and industries to thematic strategies. Lately, there has been a push for more issue-driven products. We have seen any number of environmental, social and governance-focused products as well as funds with a more ideological approach to investing as issuers look to tap into this generation's desire for investments that make an impact on both their account balance and society as well. A new fund, for example, even takes a counter view on ESG criteria and selects stocks that would fail the ESG movement. And now we have an upcoming fund from new issuer 2nd Vote Funds. What's interesting about it? That the premise here has to do with politics, or rather, the lack of politics, in how a company does business. To be clear, the fund I'll be talking about has not yet been launched. Assuming everything moves ahead without any issues, the fund should be available sometime in mid-September. Getting a 2nd Vote First, let me explain what 2nd Vote is. It's a Henderson, Tennessee-based charitable organization that describes itself as the premier grassroots volunteer-driven effort to help investors find products, charities, and investments that align with the group's values. The website entreats viewers to Join us in the fight defending traditional Judeo-Christian values and American principles, which can be done at either a $50 or $1,000 per year subscription, depending on how much of their company scoring process you may want to access. Analysts at 2nd Vote score companies on a five-tier scale that ranges from Liberal (1) to Conservative (5) with Leaning either way scores (2,4) as well as a Neutral (3) score across the following focus areas: Life: The issuer opposes any direct or indirect corporate financial activity that supports abortion (at any point during pregnancy) and what it describes as the pro-abortion agenda. Environment: The issuer supports environmental stewardship and efficiency, but rejects what it describes as extreme environmental groups that advocate for extreme environmental policies and over-regulation, referencing cap and trade policies. Basic Freedoms: This refers to the First (and only the First) Amendment. This description goes on to discuss big tech and cancel culture and then finishes with the belief that forced training the presumes any particular demographic of American citizen are racist, homophobic or biased runs counter to our basic freedoms and history as a 'melting pot' nation. 2nd Amendment: The title speaks for itself. Companies that support gun-control laws are scored poorly on this issue - Liberal, by the group's rating scheme. This scope of this issue, while limited to the right of lawful possession of firearms does apply to all firearms, no matter the type. Civil-Safe Society: This metric looks to identify and score negatively companies that advocate for open borders, sanctuary cities, defunding of police, riot-apologists and positively score companies that support law and order, state and federal constitutions and encourage respect and civility. Education: This metric focuses on two main educational issues which are Common Core and school choice. The message here is that Common Core programs should be managed and the state level after being federally hijacked by the promise of federal tax dollars. The group takes the position that School Choice not only allows parents to make the best choices for their children but in doing so will force our struggling or lagging districts to make the necessary changes to keep up with the rest of the world. In reviewing the prospectus filing, security selection begins with the top 1,500 U.S.-listed securities that have at least a $2 billion market capitalization. The remaining names are screened and scored and only companies that score in the Neutral range are selected. From that list, using a methodology licensed from Economic Index Associated LLC, each company is assigned a Financial Capacity Score, which is described as a company's ability to prosper in the prevailing FRME (Federal Reserve Monetary Policy). The top 50 names are selected. Reconstitutions are performed each time there is a change to Fed monetary policy or within 6 months of the last change, whichever comes first. My Take This issuer has two other funds in the marketplace that align solidly with their values, the 2nd Vote Life Neutral Plus ETF , and the 2nd Vote Society Defended ETF . Regardless of values or political leanings, I have found that these types of funds tend to be short-lived. Examples include funds like a number of now-closed LGBT-focused products from issuers like Insight Shares, Procure AM, and ALPS or Veterans' issues focused funds like the Victory Shares Protect America and Top Veterans Employers ETFs, which were closed in 2021. I have found in working with various groups over the years to examine these strategies is that as I run backtests that employ cause-driven rating and ranking weighted schemes, the proprietary weighting schema almost always loses out to either market cap or equal weight approaches. As mentioned earlier, this fund is not yet available to investors. I do like the premise of having a portfolio of companies that are fundamentally sound and are able to function well in any given Fed regime but as I mentioned above, caused-based strategies, for any number of reasons tend to not be successful as investment products. I'd be interested to see a comparison of this politically neutral strategy against a portfolio of top 50 financial capacity scores but it looks like I'll have to wait for the fund launch to make that comparison.

Guns, Birth and Funds: This ETF Will Play to the Right

As more and more investment products portray themselves as financial soapboxes, we look at 2nd Vote.

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