Procure debuts thematic ETF on disaster recovery

Jun 7th, 2022 | By | Category: Equities

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ProcureAM has launched the world’s first thematic equity ETF targeting companies that are providing relief or reducing the damage risk related to natural disasters.

Procure disaster recovery ETF

Damages from natural disasters could cost the US as much as $2 trillion per year by the end of the century.

The Procure Disaster Recovery Strategy ETF (FEMA US) has been listed on Nasdaq with an expense ratio of 0.75%.

According to Procure, the United States alone has sustained 323 weather and climate-related disasters since 1980, costing the country an estimated $2.2 trillion dollars in total.

Despite significant risk reduction efforts, the effects of climate change are expected to further ramp up the need for disaster relief – the US government predicts that the cost of damages from hurricanes, wildfires, floods, droughts, severe storms, and earthquakes could amount to $2 trillion per year by the end of the century.

Andrew Chanin, co-Founder and CEO of ProcureAM, commented: “The unfortunate reality is natural disasters can strike anywhere at any time and displace millions of people. Without restoration companies there to help us recover and build back, the damage would be even more devastating. The Procure Disaster Recovery Strategy ETF is an opportunity to invest in critical renewal and recovery efforts.”

Bob Tull, President and co-Founder of ProcureAM, added: “This area of the market has been long overlooked by investors, yet the prevalence of natural disasters in the last several decades and in the future is undeniable. We built ProcureAM with a mission of launching innovative and distinct investing products. The Procure Disaster Recovery Strategy ETF is emblematic of that mission.”

Methodology

The fund tracks the VettaFi Natural Disaster Response and Mitigation Index which selects its constituents from a universe of developed market stocks with market capitalizations above $250 million.

To be eligible for inclusion, companies must have a government contract for responding to or mitigating the risk of natural disasters, or have had such a contract within the past five years.

The index also includes firms that are classified within the ‘Home Improvement Retail’ and ‘Electrical Components & Power Equipment’ sub-industries if these companies derive significant revenue from products and services linked to disaster management and recovery.

According to Procure, the resulting index comprises companies that are materially involved in a diverse range of disaster relief and risk reduction efforts including firms engaged in emergency and backup power generators, engineering and construction, specialty industrial machinery, building products and materials, and waste management, among others.

Constituents are equally weighted in the index which is reconstituted annually and rebalanced on a quarterly schedule.

As of the end of May, the index contained 63 constituents. Stocks from the US accounted for 59% of the index weight with the next-largest country exposures being the UK (11%), Canada (6%), Japan (5%), and Sweden (5%).

Industrials made up nearly two-thirds (60%) of the total exposure, while the index also contained notable exposure to the consumer discretionary (15%), information technology (12%), and utility (8%) sectors.

FEMA represents Procure’s second ETF following the April 2019 launch of the Procure Space ETF (UFO US). UFO, which was the first ETF to provide pure-play exposure to companies linked to the space industry, currently houses $80 million in assets and also comes with an expense ratio of 0.75%.

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