Everything is political; it’s just a sign of the times—and that includes investing.
While not completely foolproof, it’s easy to guess the electoral leanings of a person with a heavy allocation in ESG versus a Gadsden flag-flying individual with an equally heavy weighting in, say, the Vice Fund. The latter is the famous “sin stock” manager that targets alcohol, tobacco, gaming, and defense exclusively in its hunt for alpha.
The rapid rise of ESG and the corresponding debate about elevating virtues over returns prompted several Trump allies to launch a conservative alternative. The Wall Street Journal recently highlighted two exchange-traded funds run by Nashville-based 2ndVote Advisers that target “unwoke investors,” or those “disgruntled by increased involvement by some companies in political and social issues.”
The firm’s conservative heavy hitters include economist Kevin Hassett Hassett, known for his widely-panned 1999 prediction (and subsequent book) that an uninterrupted bull market would cause the Dow to hit 36,000 by 2004. A tech implosion, Great Recession, and global pandemic got in the way and it still has yet to hit the lofty mark.
Other 2ndVote advisory board members include fast food industry executive Andy Puzder, who was President Trump’s early Labor Secretary nominee forced to withdraw from consideration over wage and workplace culture complaints, and his alleged employment of an undocumented worker. Dr. Michael Edleson, former Chief Risk Officer for The University of Chicago’s endowment, is yet another.
ESG’s rapid rise
Environmental, social, and governance investing has exploded in recent years. The Forum for Sustainable and Responsible Investment’s found that between 2018 and 2020, total U.S.-domiciled sustainably invested assets under management, both institutional and retail, grew 42%, to $17.1 trillion, up from $12 trillion.
Yet critics contend that focusing on anything other than fundamentals sacrifices return, introduces inefficiency, and ultimately harms investors, something ESG supporters vehemently deny.
It’s therefore natural that a Fox News/CNN-style national schism would lend itself to a conservative-themed investing shop.
“Without 2ndVote Advisers as a counterweight to existing asset managers, a progressive ESG agenda will continue to win,” the firm’s website proudly states. “Investors can rest assured that we will never vote proxy’s (sic) in support of ESG shareholder initiatives that diminish returns or offend conservative values.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
