The firm writes that the indexed, large cap fund is designed to offer investors equally-weighted exposure to the B.A.D. market segments – betting (casinos, gaming, and online gaming operations); alcohol/cannabis (alcoholic beverage manufacturing and distribution and/or cannabis cultivation and sales); and drugs (pharmaceutical and biotechnology product development and manufacturing) – by providing investment results that closely track the performance, before fees and expenses, of the EQM BAD Index (BADIDX).
The firm writes that while the idea for creating funds focused on vice stocks is not new, The BAD Investment Company saw a new opportunity to form a fund around B.A.D. market segments specifically due to the nature of how companies in these market segments are often treated. The firm believes the vice industry exhibits defensive characteristics (people often continue to do BAD things regardless of economic conditions), yet are often “shunned”, and underinvested segments of the market which has historically provided diversification benefits, economic resilience, and competitive risk-adjusted returns.
The BAD ETF also represents an intriguing alternative for a new wave of retail investors who may be frustrated with aspects of the ESG movement, the firm says.
“With the proliferation of whitewashed ESG products and market sub-segments like sports betting and cannabis becoming more widely accepted socially and legally, we saw an opportunity to fill what we perceived as a gap in the marketplace. We came to that conclusion primarily by listening and watching this newly energised retail crowd over the past year,” says Tommy Mancuso, president and co-founder of The BAD Investment Company. “We believe they want investment products rooted in transparency and quality that they may also be able to understand and relate to as consumers whether that is in health, wellbeing, or entertainment.”
The BAD Investment Company is embracing these changing trends to not only create a product that is diversified across multiple vice sectors but also offer investors exposure to long-term growth opportunities, the firm writes. Mancuso added, “Many new or retail investors may have a misconception and a ‘to the moon’ mentality when it comes to investing and as exciting as that may sound, we believe should focus on long-term investing and sustainable areas of the market that have historically demonstrated to be profitable and withstood multiple economic cycles.”
“Our mission is to position ourselves in a unique manner compared to most fund management companies. It’s our opinion that we don’t think or dress like the typical ‘suit,’ but are fully capable of harnessing the expertise and insights of Wall Street to provide strategically designed investment products.”
The BAD ETF is now trading on the NYSE (NYSE: BAD).