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BAD ETF Arrives for Bets on Stocks That Markets May Be Shunning

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(Bloomberg) — The 450th exchange-traded fund launch of year in the U.S. definitely won’t make Santa’s nice list.

Listed Funds Trust debuted the BAD ETF (BAD) on Wednesday to target an index focused on betting, alcohol and drug companies. 

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

“We don’t think social stigma should be a primary factor when it comes to deciding what’s a good investment,” said Tommy Mancuso, president and founder of the BAD Investment Company, which owns the EQM BAD Index that BAD will track. 

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

“It’s kind of almost up to someone’s discretion on what’s considered ESG and what’s 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 have introduced ETFs with sustainable tilts. 

BAD will have an expense ratio of 0.75%. 

And while the fund may not get a visit from Santa this year, it already received one present that’s at the top of every fund manager’s wish list: a fitting “BAD” ticker. 

“Somehow we were able to get that with no issues, which I found fairly surprising,” said Mancuso.



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