Strive’s new ETF targets strategic sectors

Sep 1st, 2023 | By | Category: Equities

Strive Asset Management, an ETF issuer specializing in strategies that are “free from politicization”, has launched a new fund targeting North American companies from sectors considered essential for global stability.

Matt Cole, CEO and CIO of Strive Asset Management

Matt Cole, CEO and CIO of Strive Asset Management.

The Strive FAANG 2.0 ETF (FTWO US) has been listed on NYSE Arca with an expense ratio of 0.49%.

According to Strive, certain sectors are projected to play a pivotal role in the coming decade due to the rising global challenges of national security and natural resource security.

These sectors are classified as Fuel (F), Aerospace (A), Agriculture (A), Nuclear (N), and Gold (G) and are collectively represented by the acronym ‘FAANG’.

Whereas the traditional FAANG acronym referred to leading tech stocks that thrived during the previous period of low inflation and quantitative easing programs, Strive’s FAANG represents sectors that the firm believes will outperform through current economic conditions.

Matt Cole, CEO and CIO of Strive Asset Management, commented: “Higher inflation, deglobalization, and geopolitical tensions are likely to persist through the next market cycle. The Strive FAANG 2.0 ETF gives investors exposure to sectors poised to benefit from these secular trends.”

The underlying Bloomberg FAANG 2.0 Select Index selects its constituents from a universe of large, mid, and small-cap companies listed in the US or Canada.

Utilizing Bloomberg Industry Classification codes, the index screens for companies involved in the following sectors: Fuel, (i.e. the oil and gas sector); Aerospace (aerospace and defense); Agriculture (agricultural chemicals, producers, and machinery); Nuclear (nuclear energy); and Gold (mining of base and precious metals).

The methodology selects the ten largest companies from each FAANG sector. Constituents are weighted by float-adjusted market capitalization while each FAANG sector is assigned an equal weight of 20%. Rebalancing occurs on a quarterly basis.

As of the end of August, industrials and materials dominated the ETF’s sector allocation with weights of 38.3% and 27.6%, respectively, followed by energy (21.4%) and utilities (11.4%). Notable stock positions included Deere (8.9%), General Electric (7.0%), Exxon Mobil (6.9%), Freeport-McMoRan (4.9%), and Boeing (4.3%).

As the firm does for all its existing ETFs, Strive will aim to unlock value across all corporations in FTWO’s portfolio by utilizing corporate governance practices such as voting proxy shares and proactively engaging with management teams and boards on key issues.

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