Procure launches disaster relief ETF
Procure, the boutique ETF provider that invented space ETFs, is launching the world’s first ETF to focus on recovering from natural disasters.
The Procure Disaster Recovery Strategy ETF (FEMA) tracks the VettaFi Natural Disaster Response and Mitigation Index.
The index provider, VettaFi, was created recently by the merger of Alerian, S-Network Global Indexes, ETF Trends and ETFdb.
To get in the index, companies based in developed markets must have a government contract for alleviating natural disasters. Companies in the home improvement and electrical equipment sub-industries can also qualify, so long as they make significant revenue from disaster relief.
The result is a portfolio of companies in engineering, construction, manufacturing, building materials, power generators and some tech.
Companies are equally weighted. Holdings include Fujitsu, Cummins, Allison Transmission, Babock, CGI.
The fund charges 0.75%.
Bernie’s commentary – the apocalypse hedge
I have a theory – it’s cynical and bleak, but stick with me. I think this ETF is essentially built as an apocalypse hedge. And that there will be an increasing demand for this kind of product as people become more pessimistic about the future.
Why? Global warming. Everyone knows that it’s getting worse. There’s bushfires, floods, and storms everywhere. Governments, in thrall to fossil fuel interests, are doing nothing serious about it. The Paris Accords don’t go far enough, as we all know. The Kyoto Protocol was never taken seriously. Millennials are getting depressed about it and refusing to have children. And who can blame them?
As the horizon darkens, people look for ways to express their pessimistic views in their portfolio. If there will be more natural disasters, why not buy companies that make money from them? While others may seek to hedge – and think if this ETF underperforms, it’s because the planet is not getting ravished. And that’s a trade off they’re happy to make.
So in sum, there will be demand for this ETF: the investment thesis behind it is sound. And people won’t care if it underperforms. I think water ETFs may fit the same mould in the years to come, as drought and wildfires become more common.
Note: I really like thematic ETFs as i think they allow for the development of interesting investment themes, however i think this is the most depressing one I have reviewed. Unfortunately the strategy seems valid, which is making me reach for the whisky with my cornflakes this morning.