BAD ETF comes for betting on stocks that the markets may avoid

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    (Bloomberg) – The 450th edition of an exchange-traded fund of the year in the US is definitely not going to make Santa’s handsome list.

    The Listed Funds Trust launched the BAD ETF (BAD) on Wednesday to create an index focusing on betting, alcohol and drug companies.

    In an ESG-obsessed investment world, BAD aims to capture areas of growth that the market may be avoiding the most. The ETF will track companies that make most of their money selling alcohol or cannabis, casinos or gambling, and developing pharmaceutical products.

    «We don’t think social stigma should be a major factor in deciding what a good investment is,» said Tommy Mancuso, president and founder of BAD Investment Company, which owns the EQM BAD Index, who track BAD will.

    BAD invests in industries that have been shunned in the investment world but are widely accepted in everyday life, said Mancuso. For him, the fund gives investors a clearer picture of what they are investing in than some funds that focus on environmental, social and governance factors.

    «It is almost entirely up to each individual what counts as ESG and what is not,» said Mancuso. «We’re not trying to hide anything here.»

    The fund’s launch comes amid a frenzy of ESG fund debuts. In December alone, Goldman Sachs Group, BNY Mellon, JPMorgan Chase and Cathie Wood’s Ark Investment Management launched ETFs with sustainable leanings.

    BAD will have an expense ratio of 0.75%.

    And even if the fund doesn’t get a visit from Santa Claus this year, he has already received a gift that is at the top of every fund manager’s wish list: a matching «BAD» ticker.

    «Somehow we got it right, which I found pretty surprising,» said Mancuso.

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