2ndVote debuts two thematic ETFs supporting conservative causes

Nov 18th, 2020 | By | Category: Equities

Tennessee-based 2ndVote Funds, a newly formed company offering socially conservative and faith-based investment products, has launched two actively managed thematic US equity ETFs.

Socially conservative ETFs

2ndVote Funds is a newly formed provider of socially conservative investment products.

The 2ndVote Life Neutral Plus ETF (LYFE US) targets firms that engage in pro-life activism, while the 2ndVote Society Defended ETF (EGIS US) invests in companies advocating for the Second Amendment and strengthening of US border security.

The funds have listed on Cboe BZX Exchange with expense ratios of 0.75%.

The ETFs comprise high-conviction portfolios of around 30-40 large and mid-cap companies, defined as those with market capitalizations greater than $2 billion.

Security selection is driven by a proprietary “social scoring” system relevant to the underlying theme followed by fundamental analysis.

The social scoring system evaluates companies’ direct and indirect corporate donations, lobbying activities, stated policies, and sponsorships of political and advocacy-related events.

The 2ndVote Life Neutral Plus ETF utilizes a pro-life score that increases for companies providing support to pro-life organizations or advocating for pro-life efforts and decreases for firms directly or indirectly supporting groups such as Planned Parenthood Federation of America and the Center for Reproductive Rights. On a scale between 1 and 5, companies with pro-life scores below 3 will not be eligible for inclusion.

The 2ndVote Society Defended ETF, meanwhile, utilizes both a 2nd Amendment score and a border security score with companies ranking below 3 on either metric being excluded from the selection universe.

The 2nd Amendment score increases for companies directly or indirectly supporting the right to bear arms and decreases for firms supporting gun control legislation, opposing stand-your-ground and concealed carry laws, or refusing to do business with the firearms industry.

The border security score increases for companies that support the enforcement of federal immigration restrictions and have supply chains that are not reliant on countries with interests that are adverse to the US. Conversely, firms that promote open borders, sanctuary cities, or the DREAM Act will have lower border security scores.

Following this screening process, investments are chosen for the portfolio based on qualitative (management quality, franchise value, and outperformance catalysts) and quantitative (sales and revenue growth, operating margins, free cash flow, leverage, and dividend history, among others) factors.

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